Licking This Economic Downturn

RG09 – Licking This Downturn (693 words)

When financial markets roil, as they have for the past year, it makes English majors like me happy twice. First, we don’t get to use the word “roil” nearly enough. It’s such a small word, not pretentious — but slightly exotic. Unfortunately, there’s very little that roils in the life of a land-lover; financial markets are about it.

Second, the roiling of cascading statistics creates so much uncertainty that nobody really understands what’s going on. Markets are down 4.5 percent! Unemployment is up to 7.6 percent! The budget deficit is $1.1 trillion! Bankers are being paid gazillions! Your ATM fee for that recent Dari-Mart visit is $5.35! So many number; so little understanding. In other words, for once the math majors don’t have it up on the English majors.

It’s only at moments like these that an English major would dare to offer anything that resembles an economic theory. But this is one of those moments and I have one of those theories.

I think I know what caused this financial crisis that has bankers checking ledge widths outside their windows. It’s none of those things we measure in the “-illions.” It’s something that costs less four bits.

It’s the “forever stamp.”

About the same time that unemployment began to skyrocket, foreclosures began to skyrocket, and the use of the term “skyrocket” began to, well, skyrocket, a seemingly small change was put into place. The United States Postal Service introduced a stamp that increases in value as the cost of mailing a letter increases.

You can bet this idea originated in a marble-walled marketing department somewhere in Washington, D.C.. They must have run focus groups and learned that postal increase aren’t unpopular because of the extra penny or two. People hate the inconvenience of being stuck with a drawer full of inadequate postage stamps. And they fear the dark specter of shame that wells up when a letter is returned for insufficient postage. Hate and fear are powerful de-motivators. Eureka! That must explain why people don’t write letters anymore. (And horse and buggies will regain popularity as soon as cup holders are added.)

A forever stamp promises to make things easier for people, and that’s what we really want from the United States Postal Service, gosh darn it!

But there’s a reason why marketers are viewed as the corporate crazies. You don’t want them messing with financial policies. Their collectible quarters and one-sided nickels made some Americans do something similar to “saving,” so it was hard to imagine they’d dream up anything that would hurtle us toward financial ruin. But they did.

Now for the first time, millions of Americans can diversify their financial portfolio 42 cents at a pop. A sheet of 18 first-class stamps is almost exactly the size of a dollar bill. $7.56 has become an affordable hedge fund.

Last week, the announcement came that the first class postage rate will increase on May 11. Buy your forever stamps now for 42 cents and soon they’ll be worth 44 cents. Where else can you put your money and see a 20 percent annualized increase in value over the next three months, backed by the full faith and credit of the United States government? Buy more stamps than you need.

We know the cost of mailing letters will only increase and if we ever find we bought too many stamps, we can always liquidate assets. Rich people will sell their yachts. We’ll sell our forever stamps.

The U.S.P.S. has no rules forbidding entrepreneurs from reselling stamps at any price they find profitable. (Click here to see where it says so at usps.com.) Soon we may see folks outside post offices offering to sell forever stamps at less than the government’s current price, but at a profit for the seller.

Anyone who worries that greenbacks might lose their value has an alternative that will fit just as easily inside a mattress. As the economy worsens, the temptation will only increase. Regular Americans may find themselves sleeping uneasily on overstuffed mattresses, tossing and turning — maybe even roiling.

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Don Kahle (fridays@dksez.com) has no credentials to offer investment advice. He writes on the Opinion page — not in the Business section — of The Register-Guard each Friday. He blogs. Here’s the link.