In a recent post, Dead Tree Edition raised the question, “Could Forever Stamps Become Worthless?” While it is theoretically possible, that an unsecured obligation like a Forever Stamp would become worthless, this would only occur if the Postal Service was liquidated. Liquidation of the Postal Service is not in the interest of secured creditors nor is it, as he notes, politically feasible.
Dead Tree Edition provides examples of retailers whose bankruptcies voided gift cards. However, in almost all cases the bankruptcies that voided pre-paid gift cards were liquidations. Bankruptcy restructurings that maintained the enterprise as a going concern rarely, if ever, voided pre-paid gift cards and other services.
Why Forever Stamps Are Safe Regardless of Whatever Happens
Forever Stamps and, for that matter, stamps in general are bought in advance of their use for convenience. Without the sale of stamps in advance, posting a letter would require a visit to a clerk to pay the postage at the same time that the letter is tendered. Posts worldwide have recognized that this makes little since the creation of the penny post in the 19th century.
The Postal Service’s secured creditor, the Federal Government, has three reasons to avoid liquidation.
- Providing postal services is a constitutional responsibility.
- Liquidation of the Postal Service would cause significant harm to the economy beyond the loss of jobs at the Postal Service. The economic harm would reduce corporate and individual tax revenue, which increases the losses that the Federal Government would incur if the Postal Service was liquidated.
- The Federal Government must pay all obligations in full, once liquidation occurs. There is no information that would suggest that the sale of the Postal Service’s assets, including its brand name, would generate revenue anywhere near the Postal Service’s unfunded liabilities.
Since, liquidation is not an option, alienating existing customers is not in the interest of any restructuring plan. Voiding pre-paid services reduces the Postal Service as a reliable service provider. While voiding Forever Stamps primarily affects letter and flat mail, reducing the trust that customers have in the Postal Service would have the effect of reducing the trust that customers now have in its parcel services and, in particular, its flagship product, Priority Mail. No amount of advertising could alleviate the harm that voiding pre-paid postage would cause to the Postal Service’s image.
So, don’t worry. Your Forever Stamps and, for that matter, those denominated stamps in the back of your desk drawer will be as good as long as there is mail service in the United States.
