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AGgressive Metal
Administrator
    
 USA
1937 Posts |
Posted - 06/15/2010 : 17:46:13
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Tracking Inflation With the Humble Postage Stamp by AGgressive Metal
Before the Federal Reserve System began to systematically inflate our nation's money supply through the issuance of notes masquerading as instruments properly backed by actual US dollars, the cost of a first class letter was 2 cents (see the chart below). Today it is 44 cents, and that is with the USPS losing money. That is an increase of 22 times, or a reduction in buying power of 95.5%. This is roughly equal to what Ron Paul and other hard money advocates say about our loss in purchasing power overall. The reason it is not a full 98% (the number that is sometimes quoted as the true debasement) is probably due to advances in mail sorting and transportation efficiency over the technology of the late 1800s.
As you can see, the only time the cost was above 2 cents was during the inflation occurring in the immediate aftermath of the War Between the States and during America's brief involvement in World War One beginning in 1917. However, by 1971, the final death of the quasi-gold standard, the price of postage had quadrupled. By the end of the gold/silver/dollar panic in 1981, the price had increased ten-fold. This was about correct, proportionally speaking, since gold began at $35/oz and settled down in the early 80s in the $300-400 range.
In recent history, there have been postage rate increases every year for the last four years (2006, 2007, 2008, 2009), as the monetary base in the US has increased exponentially. So ... got gold? Got silver? Got "forever stamps"?
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Rates for Domestic Letters, 1863-2009 Effective Date Postage, in Cents* Per ½ Ounce July 1, 1863 3 October 1, 1883 2 Per Ounce July 1, 1885 2 November 2, 1917 3 July 1, 1919 2 July 6, 1932 3 August 1, 1958 4 January 7, 1963 5 January 7, 1968 6 May 16, 1971 8 March 2, 1974 10 December 31, 1975 13 May 29, 1978 15 March 22, 1981 18 November 1, 1981 20 February 17, 1985 22 April 3, 1988 25 February 3, 1991 29 January 1, 1995 32 January 10, 1999 33 January 7, 2001 34 June 30, 2002 37 January 8, 2006 39 May 14, 2007 41 May 12, 2008 42 May 11, 2009 44
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And he that hath lyberte ought to kepe hit wel / For nothyng is better than lyberte / For lyberte shold not be wel sold for alle the gold and syluer of all the world. -Caxton's edition of Aesop's Fables, 1484 |
Edited by - AGgressive Metal on 06/15/2010 18:59:36 |
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Nickelless
Administrator
    

USA
5580 Posts |
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AGgressive Metal
Administrator
    

USA
1937 Posts |
Posted - 06/15/2010 : 19:04:36
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I'd say the prices have kept pace, generally speaking, with inflation, and the shortfalls are the result of bureaucracy, government inefficiencies, pension obligations, Congress building too many branches, etc. I'm sure FedEx and UPS could offer competitive rates on first class mail if it were legal for them to do so. |
And he that hath lyberte ought to kepe hit wel / For nothyng is better than lyberte / For lyberte shold not be wel sold for alle the gold and syluer of all the world. -Caxton's edition of Aesop's Fables, 1484 |
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PennySaved
1000+ Penny Miser Member
    

USA
1720 Posts |
Posted - 06/16/2010 : 18:04:23
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It is funny that you post this; I was going through the stamp bin at the local coin/stamp store and said to one of the workers that a stamp is an excellent example of inflation. He had laughed and said he absolutely agreed.
It is cool to look through the bin and see stamps that were 1 1/2 cents. |
SELLING COPPER PENNIES 1.4X FACE SHIPPED......“I sincerely believe that banking establishments are more dangerous than standing armies, and that the principles of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale” Thomas Jefferson |
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Nickelless
Administrator
    

USA
5580 Posts |
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beauanderos
1000+ Penny Miser Member
    

USA
2408 Posts |
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AGgressive Metal
Administrator
    

USA
1937 Posts |
Posted - 06/17/2010 : 01:47:14
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Annualized that is about a 2.3% non-compounding rate of return - better than short-term treasuries, at least. (41/44 = 93.18, or 7% difference. 7% spread over 3 years = 2.3%) Obviously not as good as gold and silver, but stamps are something you need to have regardless, so forever stamps are a logical purchase, IMO. In a way, though not literally, forever stamps are an inflation-indexed transferable bearer bond issued by the Postal Service. I say not literally because obviously there is no coupon ("bond talk" for rate of interest) and also because they won't cash them for you, though liquidating them on the secondary market would probably not be difficult. The ROI is both low and uncertain, so I would never recommend them as a serious way to preserve wealth, but you really can't go wrong picking up a few sheets in lieu of regular postage. If we have hyper-inflation, you'll feel brilliant! haha |
And he that hath lyberte ought to kepe hit wel / For nothyng is better than lyberte / For lyberte shold not be wel sold for alle the gold and syluer of all the world. -Caxton's edition of Aesop's Fables, 1484 |
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NotABigDeal
1000+ Penny Miser Member
    

USA
3890 Posts |
Posted - 06/17/2010 : 06:12:51
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I know a guy who picked up a bunch of the forever stamps when they came out. He still buys them....
Deal |
Live free or die. Plain and simple.
"If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your council or your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen." - Samuel Adams |
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beercritic
Penny Pincher Member
 

USA
112 Posts |
Posted - 08/08/2010 : 14:40:58
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Those "forever" stamps always made me wonder if the gov't was expecting deflationary times ahead. |
______________________
The last official act of any government is the looting of the nation. |
Edited by - beercritic on 08/08/2010 20:32:49 |
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uthminsta
1000+ Penny Miser Member
    

USA
1872 Posts |
Posted - 08/08/2010 : 22:36:54
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I asked at the post office sometime within the last couple weeks, and he said that a rate increase of 2c beginning January 1st 2011 had been "requested but not yet approved." I was curious because I had just found a partial roll of 42c stamps and was buying 2c stamps to make up the difference for it. |
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fb101
Administrator
    

USA
2856 Posts |
Posted - 08/09/2010 : 08:17:17
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I also worked with someone who put $500 into forever stamps at 41 cents. |
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