Could the Forever Stamp Replace the US Dollar?

Now that the USPS has stamps whose current value will "rise" over time as postal rate go up, do we have any need for the US dollar?

I've been thinking about it - I think rather than holding USD in savings accounts - it would make more sense to hold stamps in savings accounts (as long as the bank paid you the same APY). If banks and business started taking US stamps as a form of currency that would be a good thing for most of us.

Lets face it - we all hold a fairly large amount of our net worth in USD. Besides your wallet and piggy bank we all generally have a couple thousand in our checking account for daily expenses, our short term and long term savings are also generally held in savings accounts earning interest. The amount of USD held by most folks (as a percent of net worth) is much higher than most of the wealthy people in the world. This is a drag on our ability to increase our net worth as the US dollar is not adjusted for inflation and as inflation continues, the buying power of the dollar goes down.

What if we kept all our money in US stamps instead? While the US stamp isn't indexed to inflation, it acts as a better inflation hedge than the US dollar. As postal rates go up -- the value of the stamp will be worth more. If I coverted all my USD to Forever stamps at $0.41 and in 2009 the postal rate went to $0.44 and all the while I did the same things with it (ie left in savings accounts earning 5.05% APY) then I would be further ahead -- about 4.65% ahead over the 2 year period.

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Comments (16)


Why would banks pay any yield for stamps "deposited" in a savings account?

The bank pays interest because it's able to loan your money to other people, and make money from it.

For example you may borrow $10,000 from your bank to buy a car. You pay the bank 8% interest on that. The bank has the money to lend you because others deposit their money into the bank. The yield you get on your savings account is what the bank pays you for the right to make money from your money.

So, unless we're going to base our economy on "Forever Stamps" instead of US Dollars, you're not going to be able to pay for your new car in stamps. And if the bank can't lend you stamps, they're sure as heck not going to pay someone else interest on stamps "deposited" into a savings account.

you might want to take a look at this

http://www.slate.com/id/2166475/

Well -- I know its a stretch, but banks in theory will deal in any form of currency -- their business isn't based on the USD. They make money by borrowing and lending money. If that money is USD or forever stamps -- it probably doesn't make much of a difference for them. Granted it would take hundreds of years and its not really practical to make the switch -- maybe some smart thinking venture capitalists would drive this as a new business.

The Slate article basically says the Forever stamp can't keep up with inflation -- exactly - its not intended to. However it will keep up with inflation MORE than the US dollar will - right? Bingo.

Also I should point out that we still need the US Dollar -- this wouldn't work if we didn't have the dollar. This is more an idea for those of us trying to one-up the system.

In countries that already have forever stamps, they notice that there is always a buying frenzy before the stamp price changes. You could conceivably make a great annualized return off of buying them one day at $0.41 and selling them the next at $0.44, but a) You'd have a to buy a whole lot to make any money and b) you'd have to be able to sell those fast enough to make the annualized return enough. The second condition might be the harder of the two.

I'll let someone else make the money here. There is money to be made, but I think there are better ways to hedge against inflation, and make money.

Interesting idea. Besides the hard currencies, do you think stamps are a better idea than even gold, jewelery, property, artwork, and wines in terms of appreciation?

Unless I'm missing the point, isn't the article just presuming a situation where the forever stamps replaces the US dollar as legal tender because it is a better hedge against inflation than the USD.
Everyone is getting off to debunk the article saying that forever stamp cannot be legal tender for obvious reasons (we know) or it's not a great investment vehicle (not the point).

does anyone have any stories about using stamps as currency?

Actually, I think the US should get rid of the US dollar bill since it is a drag financially. They are probably afraid of the inflation implications though but every other country probably has coins for the equivalent of one US dollar.

Anyway, this stamp idea is very interesting! It would work well as long as the stamps are just as liquid as money. It would be hard to carry stamps around instead of money though since money is pretty durable while stamps are small and easy to destroy.

Interesting take on the forever stamp. The problem would always come in...what if you want to buy something...can't purchase things with stamps...

Why not? If people start to recognize that Forever stamps are actually worth more (granted only marginally for their slight inflation hedge) then they can accept anything they want for payment right?

Interesting thoughts on currency. But hisorically inflation has averaged no more than 3-4%. So if you would still do better by 1-2% by putting your money into a money market savings. Also, liquidity is a major factor as well.

Right now I don't know how well your idea could be implemented but down the rode you very well might see a financial product that uses these stamps as a benchmark given the ever exploding array of financial products in the world and the continuous desire by financial institutions to create more.

ETF's for gold, silver, and oil have been started. If the demand existed I'm sure a company would figure out how to create an ETF based on stamps.

Hmmm...sounds like we should all keep our money in on-line money market accounts.
Countrywide financial still pays more than 5%!
Can you imagine taking rolls of stamps to a mortgage closing!
Regards, makingourway
www.makingourwayblog.com

are you kidding me? stamps are not currency, so the idea that any bank would accept them as such is ludicrous. a stamp has no value unless someone wants to exchange labor, goods or (far more likely) currency in order to use it to post something. if people started hoarding stamps in the mistaken belief that they are equivalent to currency, there would be far more stamps in private hands than there would be instances of people wanting to post letters, meaning that all those hoarded stamps have no actual value. Not to mention the fact that the postage rate IS pegged to inflation - read that article in Slate.

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