Paulo Pinto
Alti Wine Exchange founding member
Dear reader,
I’m glad to be back talking financial insights – and revisiting the case for looking deeper into the real economy in the face of a deeply uncertain future ahead of us.
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In the book The Creature from Jekyll Island, author G. Edward Griffin believes the Federal Reserve was created in secret not in 1913, but actually in 1910, by an enigmatic group of bankers with the intention to manipulate economies and people while meeting in closed doors.
Readers who enjoy conspiracy theories will find much to ponder in Griffin’s book, and it reads like a detective book. But our interest today in referring this book is the grand illusion called money, a subject that we have been bringing up here while talking about wine.
Griffin claims in his book that “at the Savoy Hotel in London, one gold sovereign will still buy dinner for three, exactly as it did in 1913”. He is a supporter of the gold standard and advocates that central banks are not providers of price stability.
Speculations and conspiracy theories aside, in fact the Chair of the FED, Jerome Powell, is now laying out the case for why higher inflation is positive for the economy. This is a “monetary regime change”, confirming what we have been saying here, but not a change in the monetary system as we also have been talking here.
You will recall that we strongly believe we will have inflation in all currencies that have Central Banks printing money like there is no tomorrow. And no: we do not believe inflation is good, because it is another tax on people’s money.
Considering that the U.S. dollar has shed some 97% of its value since the creation of the FED in 1913 – and most of it since the gold standard was abandoned in 1971 –, we believe it will shed another 97% in much, much less time. That is leading to more inflation. Hopefully not runaway inflation, but there are no guarantees.
You will also recall that we advocate for real assets, and in particular fine and rare wines, because we have become more materialistic under this system where people cannot just sit on their savings anymore. Also, it is for that reason that we have been suggesting the need for a change in the monetary system.
The fact is: Western countries, under the burden of their debts, will need the help of inflation to pay back their debt. And that is why Powell has changed his views on inflation.
People are the first to act at important economic turning points, sometimes in the most peculiar ways.
We strongly believe in consumer products as a strategy, and rare wines are the best of all consumer products to act as a store of value.
For our purposes, fine and rare wine can be considered a form of money – even if it is not a financial product or under the control of any financial institution. Obviously, it could never be a competitor to Central Bank money.
The value of fine and rare wine is determined by supply and demand, and the fact that consumers drink it reduces supply, making a small fraction of the total supply more valuable, for a few discerned citizens looking for alternative stores of wealth, assuming demand will stay at least the same while the value of paper money will go down.
That is why we believe consumer prices will increase substantially, because of the irrefutable law of supply and demand. Rare wine is limited, paper money is not.
It’s the things going up in price that we want to own. Rare wine at Alti Wine Exchange will be more valuable in the coming years, and in fact they should be viewed as a strategy for the next 10 years. Here you can find some other insights on fine and rare wine investment.
Rare wine at Alti Wine Exchange is so small in quantity that can only be seen as a niche market for the more discerned people – aware and worried with unprecedented monetary expansion.
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