Wine as currency

During difficult economic times, it is often the case that hoarding becomes illegal.  It is punishable by severe fines. In Weimar Germany a law was even passed against gluttony.  Today, the USA faces a serious threat of hyperinflation.  During hyperinflation, paper money becomes worthless and unhelpful in exchange.  Therefore, people resort to bartering goods and services.  Bartering is a form of commerce that is frowned upon by government because it can’t be taxed.  If I fix your plumbing and you fix my roof in exchange, each of us spending three hours to do it, we’ve exchange services but there is no money,  no paper trail, and no receipt.  Two normally taxable events are reduced to zero tax.  So a doctor treats a lawyer’s son and the lawyer draws up the doctor’s will.  Neither reports the activity to the government and no money passes hands. It is just a friendly transaction in an underground economy.

I believe that hyperinflation is an inevitability in the US, and unfortunately here in Canada, there is going to be high inflation.  In such times, it is useful to build up a store of silver or gold.  But personally, I’ve decided to store up something that I could potentially barter.  I have been making wine from concentrated juice, grape juice and from grapes since 2004.  My wines are pretty good; I’d say the equivalent of at least a $10 CDN per bottle at our local provincially control liquor stores (called the LCBO-the Liquor Control Board of Ontario).  Wine is a controlled substance, and so I am not allowed to sell my product without a license.  But when times are desperate, and money is worth nothing, I figure that I should be able to barter bottles of wine for food or other goods and services that I might need.

So I’ve decided to stock up on wine kits.  These kits are $70 for two at Costco, or $45 for one at my local supplier. Each kit contains concentrated juice that will make 30 bottles. I know that the juice remains usable for at least two years maybe more. Once made into wine, the wine can be aged another two years.  It is not certain how long the wine will last after that.  So my minimum cost base will be $1.17 per bottle plus my labor (which isn’t worth anything). If I buy 10 kits at Costco at a price of $300, I’ll be able to hoard 300 bottles of wine in reserve.  This would give me $3000 worth worth of goods with which to barter, and the product itself has an indefinite shelf life.  I estimate that it would be about the same as buying two one-ounce coins of gold, at a cost of $300 CDN.

The great thing about alcoholic beverages is that they do not lose their “currency” in times of depression.  Indeed, people feel the need to celebrate or to drown their sorrows even more during economic hardship than during the good times.  If the economic crisis never comes to Canada, well I can consume my product or give it away as gifts.   Or if the crisis comes and I am unable to barter the product, my wife and I could consume the wine for the calories and it will stave off starvation for a moment.

Advertisements

One thought on “Wine as currency

  1. Pingback: Commodity inflation is caused by monetary inflation « The Righteous Investor

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s