Easy money from the Fed drives a bubble in art?

Miro, one of my personal favorites.
Miro, one of my personal favorites.

3 key components to wealth which lasts generations are said to be gold, land, and art. The first 2 classes are somewhat obvious, but art is less so. Yet the rich over the centuries have always invested in paintings and sculpture.

However, today’s art market has detached from underlying reality because of all the easy money created by the world’s central banks. It may be true that art is vital to any portfolio built from new money which hopes to one day be old money, but the money created in recent years is not what it used to be. The current high end art market is a reflection of this.

Might as well drop $50 million on a painting now while the dollars continue to rain down from the Federal Reserve. Yellen’s loading up the helicopter as we speak. To Sotheby’s!

(From Yahoo News)

Art collectors made news for a second straight night on Wednesday as Sotheby’s held the biggest auction in its history, led by the record-setting $105 million paid for a work by Andy Warhol.

The previous day, hedge fund managers, oil princes and oligarchs were bidding by telephone at Christie’s when the auction house sold Francis Bacon’s “Three Studies of Lucian Freud” for a record $142.4 million, in what was seen as a test of the global art market’s health.

It passed. Among the reasons, art consultants and hedge fund managers say, is the rise of a class of super-wealthy collectors, many of them from Asia, the Middle East and Russia – zones bolstered by years of booming commodities prices.

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