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article analysis #7

article analysis #7 - not a strong investment In 1989 the...

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Colin Desmond April 19th, 2009 Macroeconomics - 010 Professor Andrew Meyer Article Analysis #10 The USPS unleashed its new “forever stamps”, selling at 42 cents. While it may sound like a good investment, as the stamp is good no matter how high the price rises in the future, this is quite the contrary. Stamps have risen more slowly than the CPI in- dex for decades, indicating that they are actually cheaper (losing value in the terms of forever stamp holders). This is why it is a bad investment. Not only does it not have an attractive rate of return, it is actually on pace to lose value in the near future. On top of that, former President Bush passed a law stating that future stamp price increases would be kept below an inflation based ceiling, further proving that forever stamps are
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Unformatted text preview: not a strong investment. In 1989, the stamp cost 25 cents, and the CPI was 124. When this article was written, the stamp cost 41 cents and the CPI was a little over 207. By multiplying today’s stamp price by the CPI of 1989 divided by the CPI of 2007, I was able to discover that the stamp of 2007 was a half cent cheaper than that of 1989. That being said, a forever stamp would not be a wise investment. The forever stamp could have been a good investment, but only if it was released early in the twentieth century. Stamps like the 1919 and 1952 stamps would have been a bargain compared to the price of a stamp today. However, today you’d rather be put-ting your money somewhere else....
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