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Tracking Inflation With the Humble Postage Stamp

PostPosted: Sun Sep 12, 2010 10:26 pm
by AGgressive Metal
Tracking Inflation With the Humble Postage Stamp
by AGgressive Metal

Before the Federal Reserve System began to systematically debase our nation's money supply with 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 or barely breaking even. 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 estimate is our loss in purchasing power overall in the period since 1913. 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 that occurred in the immediate aftermath of the War Between the States and during America's brief involvement in World War One beginning in 1917. In fact, the price was never above 3 cents until August 1st, 1958! However, by 1971, the final death of the quasi-gold standard, the price of postage had quadrupled to 8 cents. 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"? :P

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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

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 set coupon (interest payment) 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!

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Re: Tracking Inflation With the Humble Postage Stamp

PostPosted: Fri Oct 15, 2010 9:32 am
by horgad
FYI: The last attempt to raise was denied. The current stamp price right now should be at least 46 cents according to the post office. Instead the post office will continue to lose money and be supported by tax dollars and money printing. Someone doesn't want the public to get a bad feeling about inflation from ever faster increasing stamp prices...

http://www.heraldnet.com/article/201009 ... /100939967

Re: Tracking Inflation With the Humble Postage Stamp

PostPosted: Wed Feb 16, 2011 7:48 pm
by Mossy
In the event of hyper inflation, I suspect the USPS will default on this product.

Re: Tracking Inflation With the Humble Postage Stamp

PostPosted: Sun Feb 20, 2011 12:46 am
by Beau
.
the forever stamp is over priced.

some days I get 25 letters a day in my mail box.

that is $11. just to open my mail box, plus the postage off the advertisements, and

the daily packages.

the postman walks less than 20 feet to my box and all the neighbors, all of them

get the same as I do.

THE USPS IS MAKING MONEY



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