The Beer Economy

 Posted by at 5:01 pm  Gold Standard
Nov 272015

Proponents of a Gold Standard look forward to the day when people use gold and silver coins as money but it seems that beer and spirits have a head start. This article sheds light on hundreds of secret Facebook groups in Australia where people barter goods and services for alcohol in various forms, with one group claiming 50,000 members.

Australia had an early history with an alcohol based barter economy, with rum as the medium of exchange from 1793 onwards due to a shortage of coins in the colony. The New South Wales Corps established a monopoly on the importation of rum and profited from its trade. The appointment of William Bligh (known for the mutiny on the Bounty) as governor of the colony and his outlawing of the rum trade resulted in the Rum Rebellion of 1808, “the only successful armed takeover of government in Australian history”.

While gold has been coined and used as money for over 2,500 years, with the World Gold Council noting that “gold coins were first struck on the order of King Croesus of Lydia … around 550 BC”, it appears that beer pre-dates that by thousands of years, with historians speculating “that prehistoric nomads may have made beer from grain & water before learning to make bread”.

Gold’s advantage is the uniformity in the unit of measure whereas with alcohol based units one would have difficultly converting between a 6-pack of light beer, full strength, or spirits of various proof/percentage.

With tax authorities considering barter transactions as assessable for income tax purposes, for the less honest beer does offer the advantage that the evidence of one’s tax avoidance is easily (and pleasurably) disposed of. However you may get caught out when audited if you have zero credit card expenditures on alcohol while still showing sizable beer belly.

Another strike against the precious metals is the case of Holland and Belgium, who it seems, “won their independence from the Spanish because of beer. They financed their armies from beer tax, while the Spanish relied on tax on silver. The beer won.”

The problem with beer based bartering is that one may never end up saving one’s profit given the temptation to consume one’s hoard after a hard day’s work. Maybe beer based money is the solution to the perceived problem of a lack of inflation and falling monetary velocity where people seem to be hoarding cash and not spending it?

Maybe there is a role for gold and silver after all – for saving – leaving with beer for bartering and spirits for spending.