Luxury is far simpler than what we once thought it was

by Feb 12, 2021Thinking outside the bottle0 comments

Simplicity might just be what brings luxury to our lives (photo, Helena Lopes/StockSnap)

Simplicity might just be what brings luxury to our lives (photo, Helena Lopes/StockSnap)

Paulo Pinto

Alti Wine Exchange founding member

Dear reader,

I truly believed that luxury meant a symbol of rare, expensive, exclusive – just like the fine and rare wines offered by Alti Wine Exchange.

But the world has changed during these last 12 months, and I now realize that luxury is a symbol of something far simpler – like being able to go outside, breathe fresh air without a mask, meet family and friends, to be able to socialize with others.

What a luxury to be able to see people smiling with no masks, to hug a loved one or kiss a family member without violating rules.

Will we be able to return to our luxury of living well and free with the vaccine? I am still not convinced, even if much of the damage from this virus has already been done.

Debt has reached such high levels and so many businesses have closed that any return to normal is unlikely. Those who have been following our blog know that our interest is discussing money and the economy while drinking wine. So let’s dive into the topic.

Reacting to a call by more than a hundred economists, European Central Bank chief Christine Lagarde rejected canceling debts run up by eurozone members saying “it would be a violation of the European treaty which strictly forbids monetary financing of states”.

The interesting thing is, the ECB balance sheet is 61% of GDP – because it has been monetary financing European countries.

How much more central money will be printed? Will ECB reach 126% of GDP like in Japan?

In the view of the attitude politicians have towards debt, it looks possible. At zero percent interest rates, politicians are seduced into borrowing to infinity.

That is why we keep our eyes firmly on inflation.

What we saw in the Harmonised Indices of Consumer Prices (HICP) of the Euro area in January confirms what we have been saying. All of the big four countries surprised to the upside. The most impressive rise came from Germany, where inflation rose to 1.6% y-o-y from 0.7% – but, overall, Euro area inflation in January rose to 0.9% from minus 0.3%.

We have been wondering about the need to prepare for a future with inflation and currency devaluation.

***

We talk about money… over wine. And that is how we came to fine and rare wine.

We have been amazed for the past ten years by this money creation and little effect on inflation, but we know from experience that, when it comes to inflation, we have to prepare in advance, otherwise it will be too late.

In the meantime, the global economy is slowing, but the negative interest policy is helping to inflate assets – and, this January, also the Harmonised Indices of Consumer Prices.

Negative rates suggest that the value of money is less than nothing, and if that is so, the value of fine and rare wine is a shield to what money buys.

***

Luxury, one could argue, could be found over much more ordinary aspects of our economic and our social lives…

Until next time,

Paulo


More articles by Paulo Pinto

Explore More from Our Blog

Alti Wine Exchange Indexes: 2021 overview and trends for 2022

Sergey Glekov Senior financial analyst The Alti Wine Exchange Indexes are a family of equal weighted indexes which trace price performance of fine and rare wines and shows equal weighted average returns on them. The indexes are subdivided by most important wine...

They have created the perfect storm for controlled demolition of money

I’m glad to be back talking financial insights, one glass of wine at a time. First they shut down the economy, to save lives. With the closure of the economy, production ceased. To compensate for non-production or reduced production, people were paid not to lose...

Spanish Cava Sparkling Wine: What You Need to Know!

Spanish Cava Sparkling Wine: What You Need to Know!

What is a Port Wine?

DEAR READER, Let’s start February off with a simple question: Good morning, Mr. Ferdinand, What is a Port wine? -Jacques Thank you, Jacques, for your brevity. Let’s get down to business! Ports are an underrated, very particular type of wine made in the Douro Valley,...

What to Expect for Fine Wine Investments in 2022

Let’s face it, between an ongoing COVID pandemic, erratic markets, fires, floods and major humanitarian crises, 2021 was exhausting. And though none of us can be sure what to make of 2022, we can say with confidence that fine and rare wine investments are looking...

Holiday Gift Guide for Fine Wine

It’s that time of year again! And so begins the search for the perfect holiday gift. Something unique, something that shows you truly care. How about a gift that keeps on giving? An investment. Imagine their surprise when you tell them that their gift is resting...

FAMILY-RUN WINERIES

DEAR READER, As I grow immensely in popularity, I’ve noticed more of you interested in my personal life. I didn’t begin e-blogging with this in mind, but I don’t mind indulging every now and then. I imagine my intellect intimidates a lot of you, so maybe shedding some...

The Truth about Fine Wine

Fine wine. What does that really mean? The truth is, as words, they don’t mean much. There is no official classification system for the title “fine wine.” It’s not like the regulated usage of “Premier Cru” or “Grand Cru Classé,” for example, rather anyone can throw it...

Maipo Valley Reds

DEAR READER, I am again-and-again charmed by my readers’ curiosity! It reminds me of being a young sommelier, ready to take on the world one glass at a time. I know far too much to feel that way again—but at least I can experience a shred of it through you all! Dear...

Liquid Harmony

Harmony. Think Crosby, Stills, Nash & Young. Think Picasso's The Old Guitarist. It’s that moment when various elements come together to create magic. And magic really is the word, no? Wine can also sip in harmony, and I can think of no better example than the...

Where Does the Phrase “Aging Like Fine Wine” Originate?

DEAR READER, I received this charming question from an inquisitive reader last week. Dear Sommelier Ferdinand, Where does the phrase “aging like fine wine” originate? It’s so fun! -Imani I just love your question! What a lively spirit you have, Imani! I’m more of a...

NOSTALGIA AND THE ADELAIDE DOURO RED

DEAR READER, Let’s get down to it! Dear Sommelier Ferdinand, I respect your point of view, but I must ask: don’t you think worshipping wines is partaking too mightily in the past? Wouldn’t you rather create your own memories than indulge in nostalgia? -Ethan Ethan,...