USA postage stamp rates and inflation. Easy reading.......educational

Inflation et al

by Henry Burt Stevens
08/05/2006
authorsden.com

There is an economic lesson that comes with every piece of mail you receive from the USPS, United States Post Office.  It's located in the upper right hand corner of the envelope and is the rate in $USD United States dollars and cents.  The lesson isn't about mail service, but is about money and fiat money.

Long ago and far away from any recent memory there was a connection between value and money.  The money circulated as gold and silver coins and the value tied to the coins changed very slowly, if at all.

Now there is no connection between money, our currency, bank accounts, checks and credit cards and their value -we have a fiat money.

Postage rates for First Class sealed envelopes under one ounce were 2 cents for many years.  Now they are 39 cents and will soon be over 40 cents, perhaps 43.

This is inflation, the debasing of the fiat money.  Goverments and debtors love inflation because they can repay their debts with cheaper money.  The United States citizens currently have a negative savings rate, which means they are spending more than their income year by year.  Their government has almost a 100% record of doing the same thing.  So inflation will contiue to be loved fiercely by about everybody.

Here is a list of the postage rates and dates of change which have brought us to our present  anticipation of an over forty cent rate.

1883 2c
1917 3c
1919 2c
1932 3c
1958 4c
1963 5c
1968 6c
1971 8c
1974 10c
1975 13c
1978 15c
1981 18c
1981 20c
1985 22c
1988 25c
1991 29c
1995 32c
1999 33c
2001 34c
2002 37c
now  39c
soon 43c?

Presently, the USPS is planning a "forever" stamp.  Buy it today for the new first class rate and use it anytime to mail a first class letter.  What are they thinking?  This is a gold standard postage stamp.  I'm going to buy a ton of them.  I wonder if other people will.  What if a lot of people did the same?  The USPS would have a increase in revenues followed in the next few years when they would be providing the service they'd already recieved the money for one or two fiscal years ago.

Now about the "et al" above.  Along with inflation there are the evil twins of deflation and stagflation.  Deflation is when the money buys more because prices are falling.  Hold the fiat money and it will buy more later on.  Savers love this, but there are only a couple of savers left, while the debtors suffer pain and bankruptcy trying to repay their debts.  Stagflation rarely happens, but that is when overall economic activity falls but inflation contiues to go up.  Everybody loses and this condition is always quickly repaired.

I hope you have enjoyed this little essay.  I'm happy to say I no advice to give anyone on dealing with the events being described.  s/henry