2010 Castelgiocondo Brunello di Montalcino

You don’t know me and I don’t know you. Maybe we saw each other from across the room at an opening or at one of the August shows. It doesn’t matter, really. I mean, it matters in the sense that neither of us are total strangers to each other. If you live in Santa Fe, you’re not a total stranger to anyone else who lives here. We may not be friends. We might even be enemies. Friendship doesn’t come with a lifetime warranty. Trust has an element of strength built into it but that element is as much an act of faith as an act of will, and it’s easier to lose faith than it is to find it. The good news is, you don’t need to trust me to accept my information as factual, and my information doesn’t need to be factual in order to be valuable.

The bad news is, our culture faces a threat, and the threat is imminent. You can’t hedge against a threat like this. One way or another, everyone will be harmed. The threat has been in the air for years, much in the same way that epidemics become known to large numbers of people before large numbers of people get sick and start dying. The world of finance knows about the threat. The financial media is all too willing to ask their roster of so-called experts if the threat is real or just another shadow cast by the $200 trillion Tower of Babel we refer to as “the banking system.” The reason I’m breaking the fourth wall is because I believe this threat will cause you, me, and everyone we know a great deal of pain. And when I say “pain” I don’t mean the kind of pain you feel when you have an allergic reaction to a presidential candidate. I mean the kind of pain you feel when your children look up at you and say, “Are we going to be all right?” and you don’t have an answer.

The threat is negative interest rates. Just so there are no misunderstandings, when I say “negative interest rates” this is what I mean: You deposit twenty thousand dollars in a brokerage account or a savings account and leave it there. When the time comes to withdraw your money, you get less than your twenty thousand back. Instead of getting paid interest for depositing your money in a financial institution, that institution charges you interest. If that sounds medieval, that’s because it is medieval. Mark Twain said he was more interested in the return of his capital than a return on his capital. In a negative rate environment, the world of finance characterizes Twain’s preference as a flight to quality and charges a premium for it.

In Japan, where negative rates have been around for years, they have a shortage of safes. Think about it. The Japanese have all the cash they need, but they lose money on their cash unless they keep it in their safes.

Which brings us to the 2010 Castelgiocondo Brunello di Montalcino. In the glass, the 2010 Castelgiocondo is the color of the blood that runs through the veins of a thoroughbred. (Sangiovese, the grape that gives us Brunello, is a contraction of “Sangue di Giove” –“the blood of Jove.”) The bouquet is all dignity and nobility, with notes of mischief and life on the run. On the palate, the Castelgiocondo reminds you that the profane and the sacred are never far apart. The finish is a moment of solidarity, a tap on the shoulder, a smile from across a crowded room.

If you grew up during the seventies, eighties, or nineties, you came of age during an era when money was being created out of thin air. The more money the banking system created, the higher the prices of the goods and services you bought with that money. Inflation teamed up with death and taxes to create a triad of inevitability. If you ignored inflation, you paid a price for your ignorance, and that price was less purchasing power. If you were smart, you borrowed money, spent it on assets like art, real estate, or wine, and went to bed each night with the expectation that you’d be worth more when you woke up than you were when you went to sleep.

These days, the sleep of reason has produced a monster, and that monster is negative rates. The world of finance is a monster dressed up as an aristocrat—a vampire that can, must, and will be fed. If you ignore the vampire, you run the risk of satisfying his appetite.

What can you do? Don’t waste time waiting for elected officials to pass a law against negative rates. The nature of a crisis is that by the time a problem blooms into a crisis, it’s already too late to solve. Politicians like crises. The United States government is the biggest borrower on the planet. If you were the biggest borrower on earth, and had a choice between paying to borrow and getting paid to borrow, wouldn’t you choose to get paid?

The best way to protect yourself is to remember the difference between inflation and deflation. In an inflationary world, wise guys talk about how much money they’ve made. In a deflationary world, wise guys talk about how much money they’ve saved. In both worlds, survivors listen. Remember that, ignore the distractions, and we’ll survive.

One Bottle is dedicated to the appreciation of good wines and good times, one bottle at a time. You can write to Joshua Baer at jb@onebottle.com.