Friday, March 12, 2010

Meridian Original: Stamps, The Dollar, Inflation and The Federal Reserve

I apologize for the formatting issue.

A postage Stamp Cost $.01 (1 cent) in 1913, the year the Federal Reserve came into existence.

A postage stamp today (2010) costs $.44 (44 cents), about 97 years after the Federal Reserve came into existence.

This is a chart from the Federal Reserve showing that a 1913 $1 now is worth $.05 according to the CPI

Let me spell this out. In 1913 a person could buy 100 stamps with $1. Today they can buy 2.27 stamps. This is annualized decline in purchasing power of close to 4% (3.83%) or about 98% total loss (which parallels the Fed chart above of a 95% loss) of purchasing power.

Given this history and extending it out to say 2050, you will be able to buy 1/2 of a stamp. Anything wrong with this picture?

Scott Dauenhauer CFP, MSFP, AIF