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Does inflation have an effect on stamps? Since the financial world's view is always fixed on the future, and in some way stamps are also commodities, no doubt many stamp collectors would like to ask how inflation would affect them. Indeed, it is unusual for a philatelist not to be interested in the rise and fall of the stamp prices. Though it may be true that some philatelists may want to mostly collect, they would still be affected by the prices of stamps, since he would need to buy them. Then again, even if he is not looking to sell his stamps, he may still be curious as to what prices his stamps will bring. Therefore, definitely inflation affects philately. 

Like all commodities, stamps too are likely to be governed by the basic law of economics: the law of supply and demand. To the uninitiated, this simply means that when the supply of any given article exceeds the demand, the price will drop and when the demand increases and there is not enough supply, the price will increase. An interesting situation prevails here: With regard to ordinary commodities such as wheat, automobiles and furniture when there is a demand, the supply may be increased to fill the demand, or decreased when the there is an over supply. In the case of stamps, however, the supply is fixed, and it is only the demand that varies. When the demand falls, prices fall and when the demand exceeds the supply, prices soar.

Suppose the United States acted, for whatever reason, to inflate its currency, people holding cash would lose. This is because an increase in the amount of cash in circulation would have the effect of lessening the value of the cash already in circulation. However, those people whose possessions are goods would gain, since more cash would be in circulation with which to purchase these goods. This is why prices increase when inflation looms.

For example, when inflation hit Germany in the early 1920's, an epidemic of buying swept the country. Stamps, as everything else, brought higher prices than ever before. It is therefore probable that a similar condition could be expected in any inflation.

In any inflation, the stamp investor would be able to obtain more money for his stamps. However, there is another factor to consider: the value of the money. When the costs of living rises, the value of the dollar will decrease, as each dollar would buy less goods than before the inflation. Therefore, though the stamp investor would gain more money from his stamps, the value of his money would be less or more depending on the degree of the inflation. But what happens when a government takes drastic action to control inflation? We take another example from Germany.

When inflation in Germany got out of control, the person who had earlier invested in stamps, proved to be fortunate. When a new currency was established, he could convert his holdings into the new money. The person who placed his faith in cash had nothing but worthless pieces of paper.

Even supposing the inflation were controlled, the stamp accumulator would still be better off than the person who saved his cash. The cash accumulator, at the conclusion of an inflation policy, would have the same amount of cash he had when it began. The philatelist, who could have sold his stamps for a certain amount of money, say a thousand dollars, will now realize that the additional money in circulation would make his collection worth twice as much. It is true that his money will not purchase any more than it would have had he sold at one thousand dollars, but in comparison, the person who held on to his cash, using the same thousand dollars in cash, can now buy only five hundred dollars worth of goods.

One drastic thing may still happen to thwart the stamp investor. What if the demand for stamps were to cease during inflation? It is possible that with the value of the money having dropped, the public may not be interested - or able - to buy stamps. This is a possibility, but then the stamp market is an international market. It is conceivable that the collector would be paid fair sums with foreign currencies from countries which do not suffer the effect of the inflation or perhaps do not suffer as badly.

During inflation, the collector who places all his savings in stamps has little need to worry. The collector, who invests in stamps while bankers, insurance companies and institutions were buying bonds, would find that he had found the escape from inflation that investors in stocks and shares have been seeking. When mayhem rules around him and banks, corporations and financial wizards are in deep despair, the stamp investor could just stay still and smugly wait for the situation to turn around.