US forever stamps as an alternative "currency"

Just read about this interesting inflation "hedge":

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Forever Stamps - What Are Forever Stamps?
http://0.tqn.com/d/contests/1/G/h/1/...er300dpi_s.jpg

Forever Stamps are first-class stamps issued by the United States Postal Service. What makes them special is that you can buy them at the current first-class postage rate, and they remain valid even if that rate rises in the future.

If you assume postal rates will always rise and never sink, then Forever Stamps are a good investment. :wave:

If you enter mail-in sweepstakes, buying Forever Stamps can protect you from the additional risk associated with rising postage stamps.

Forever Stamps can be purchased from the United States Postal Service at your local post office, online, or by telephone.

The Canadian Post offers a similar product, the Permanent Stamp.

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http://contests.about.com/od/f/g/foreverstamps.htm

Seems to be a great investment:
http://www.johnstonsarchive.net/other/postage3.gif

Not a horrible idea, but what if the US Postal Service goes completely bankrupt and either decides to stop delivering all together or that they will no longer accept current stamps and you must buy the new form of postage... then those holding stamps are SOL.... where as other hedges, like gold/silver have value to other people/countries outside of the US and outside of 1 department of the US Government....

USPS = bankrupt (and then some). I don't like the counterparty risk on this one.

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Originally Posted by thoughtomator

USPS = bankrupt (and then some). I don't like the counterparty risk on this one.

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They're bankrupt every few months. In the end the counterparty risk is the US government because they're always beeing bailed out. So it's kind of a zero coupon open-ended treasury with yearly price hikes.

http://www.zerohedge.com/news/2012-1...illion-loss-ma

Forever stamps... who actually believes that crap?

Anyways, it's a cool idea nonetheless.

http://www.nytimes.com/2012/11/16/us...loss.html?_r=0

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Postal Service Reports $15.9 Billion Loss
WASHINGTON — The Postal Service on Thursday reported a record $15.9 billion net loss for the fiscal year that ended Sept. 30, bringing the financially troubled agency another step closer to insolvency.

The widely expected loss, more than triple the service’s loss last year, included accounting expenses of $11.1 billion related to two payments that the agency was supposed to make into its future retiree health benefits fund. But because of revenue losses, the post office was for the first time forced to default on these payments, which were due in August and October. Nearly $5 billion in other losses were due to a decline in revenue from mailing operations. The agency also reached its $15 billion borrowing limit from the Treasury.
Despite its financial troubles, officials said that the post office would continue to operate as usual and that employees and suppliers would be paid on time. The agency had warned that it could face a $100 million cash crunch in the month of October because of a decline in revenue. But the agency reported more than $500 million in revenue from candidates, political parties and other interest groups sending out campaign mail before the election. The agency said the revenue from political mail and the holiday season should help its cash situation until Congress acts on legislation to overhaul the post office.

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“The Postal Service is facing a fiscal cliff of its own, and any unanticipated drop in mail volumes could send the agency over the edge,” said Art Sackler, a coordinator of the coalition. “If Congress fails to act, there could be postal slowdowns or shutdowns that would have catastrophic consequences for the eight million private-sector workers whose jobs depend on the mail.”

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If the post office were being operated responsibly, forever stamps might be a reasonably good investment, but it isn't.

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Originally Posted by Tod

If the post office were being operated responsibly, forever stamps might be a reasonably good investment, but it isn't.

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If the post office operated in a perfectly competitive market, its prices would be determined by individuals acting in that competitive market, and there would be never be any reason for insolvency, assuming it was managed competitively.

None of the post offices stamps should ever have been anything but forever stamps. People who paid .15 cents in the '70's paid the ostensible equivalent of what is being charged now. Only a Ponzied fiat currency regime made that impossible. For the countless stamps that were purchased but never used, the Post Office had the use of ALL THOSE FUNDS without having to actually deliver anything in return.

I see this is a way for the USPS to generate immediate revenue, while kicking their own fiscal can down the road. Because the fiat currency is only guaranteed to lose value, the "forever" stamps in the aggregate are a guaranteed loss to the USPS over time. The only thing they have going for them--and I'm betting the USPS is betting on this--besides immediate revenue generation--is the possibility that those stamps will be more likely to be stored away and not redeemed, as people are secure in the knowledge that they will always be good, but not sure in the knowledge that forever stamps will be offered in the future.

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Originally Posted by Steven Douglas

If the post office operated in a perfectly competitive market, its prices would be determined by individuals acting in that competitive market, and there would be never be any reason for insolvency, assuming it was managed competitively.

None of the post offices stamps should ever have been anything but forever stamps. People who paid .15 cents in the '70's paid the ostensible equivalent of what is being charged now. Only a Ponzied fiat currency regime made that impossible. For the countless stamps that were purchased but never used, the Post Office had the use of ALL THOSE FUNDS without having to actually deliver anything in return.

I see this is a way for the USPS to generate immediate revenue, while kicking their own fiscal can down the road. Because the fiat currency is only guaranteed to lose value, the "forever" stamps in the aggregate are a guaranteed loss to the USPS over time. The only thing they have going for them--and I'm betting the USPS is betting on this--besides immediate revenue generation--is the possibility that those stamps will be more likely to be stored away and not redeemed, as people are secure in the knowledge that they will always be good, but not sure in the knowledge that forever stamps will be offered in the future.

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Totally agree.

Forever stamps wouldn't be a good investment in the first place if the USPS was managed responsibly. Stamp prices would never have appreciated as much as they did.

Forever stamps actually guard against 2 things : inflation and postal fee increase. Both can happen independently.

The problem with using Forever stamps as a currency or preservation of value, is that first class mail is decreasing day by day. So if they become less usable, you may have saved a lot of stamps but unable to sell them or use them. You may be able to add them up on packages, which would be ideal.

Also, the intent of Forever Stamps is logistical, not for consumers to save money. So if inflation or postage rates were expected to increase dramatically, rest assured, forever stamps will go away. They may compromise and make "Expire in 2 years" stamps. Until then, feel free to stock up.

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Originally Posted by Tpoints

You may be able to add them up on packages, which would be ideal.

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Even with that it is not ideal. As the package gets heavier, UPS and FedEx become less expensive options over USPS.