Printing paper money at a printing press in Perm. Source:Â Wikipedia
New York, New York
Dear Diary,
Stocks are trading at a new record. Works of art hit a new record too.
From Bloomberg:
An almost 6-foot-tall Jeff Koons white plaster sculpture of a woman holding three Hermes Birkin bags sold for $4 million last night at a charity auction in New York, 60% more than similar works fetched in the past.
The sale of “Gazing Ball (Charity)†followed last week’s tally of $673 million for Impressionist and modern art sold at Manhattan auctions, setting the stage for a potential record season if high prices continue this week.
“I’m long-term bullish on the art market,†Rajiv Chaudhri, president of Sunsara Capital LLC in New York and an art collector, said at the event at the Four Seasons restaurant in New York. “Prices will keep moving up. There is still so much private wealth being created. Art is the ultimate asset.â€
Mr. Chaudhri is wrong about several things…
First, private wealth is not being created; it is being fabricated by central banks.
Second, art is not the ultimate asset but probably a poor and unreliable one.
And third, the art market is not going up the way he imagines. When the money drains away, the aficionados will be punished: They’ll be stuck with their purchases.
Oceans of Liquidity
Still, Mr. Chaudhri is right about one thing: There’s a lot of money around.
Yes, rich people have gotten a lot richer in the last few years. The top 1% now own 35% of America’s wealth. The bottom 80% owns only 11% of it.
Where did all this money come from?
We’ve seen estimates for the effect of QE on the balance sheets of the country’s asset holders. Over the last five years QE has added between $2.5 trillion… to as high as $9 trillion.
Now, with so much loose change in their pockets, the rich can bid for Jeff Koons’ confections… Manhattan condos… or whatever they want.
