Today the US Postal Service (USPS) rolls out its new “forever stamp.” The same stamp that you buy today will still provide postage for a 1 ounce letter in 2017 or even 2107.

So are the forever stamps a bargain for consumers or the Postal Service? A little of both. They eliminate those annoying 1 and 2 cent stamps for consumers and smooth revenue for the USPS. Maintaining consistent pricing has been a challenge for the Postal Service. Looking back at the inflation-adjusted price of stamps since 1945 (for nominal prices, check out spudart), stamps have ranged from $.22 in 1956 and 1957 to $.49 in 1975.

Historically it was difficult to hone price increases to match inflation for one simple reason: we don’t have a currency smaller than the penny. Raising the price from $.03 in 1957 to $.04 in 1958 constituted a nominal 33% price increase. Today a 1 cent increase only means a 2.4% price increase. The implication is that with more expensive stamps, it has become easier for the USPS to track inflation keeping the real cost of stamps more consistent. Expect this to continue in the future as the USPS ties the price of the forever stamp as closely as possible to inflation. Regardless of their effort, it seems likely that a secondary market in forever stamps will crop up. Why? Arbitrage.

According to the USPS web site, there is no limit to number of forever stamps you can buy. So someone playing in the futures market of stamps (statastic is not promoting this) would wait until the day before the next forever stamp price increase. An investor would fork over $4.1 million to buy ten million forever stamps the day before the next penny price hike. By holding a futures contract guaranteeing a buyer for all of the stamps at 41.9 cents each, the speculator could turn an overnight profit of $90,000 - assuming the USPS doesn’t make this illegal first.

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