Because QE puts so much money in the hands of already rich people that they lack markets to invest in, therefore arts, collectible cars, posh condos and houses all go up with the bubble.
I think the article makes a good case for it having more to do with a kind of cultural globalization among financial elites than with QE, since the market has been booming more less continuously since the 90s and not just since 2008/9.
"Since the doldrums of the early nineties, the market for contemporary art, which has various definitions (work created after the Second World War, or during “our” lifetime, or post-1960, or post-1970), has rocketed up, year after year, flattening out briefly amid the financial crisis and global recession of 2008-09, before resuming its climb. Big annual returns have attracted more people to buying art, which has raised prices further. It is no coincidence that this steep rise, in recent decades, coincides with the increasing financialization of the world economy. The accumulation of greater wealth in the hands of a smaller percentage of the world’s population has created immense fortunes with a limitless capacity to pursue a limited supply of art work. The globalization of the art market—the interest in contemporary art among newly wealthy Asians, Latin Americans, Arabs, and Russians—has furnished it with scores of new buyers, and perhaps fresh supplies of greater fools."
The money supply is expanded by stuffing the top end, the middlin-and-below credit consumers are already stuffed and/or maxed out, so, unsurprisingly, the high end is trading stuff back and forth and higher and higher prices.
This is one reason that, despite the fact I lean anarcho-localist, I tentatively support a citizens dividend: if we are to have a fiat monetary system we could at least make the expansion thereof equitable and eliminate the early-receiver advantages in New York and D.C.
It’s not about rich people only. Reprints of famous paintings that cost between $5k-$20k are sold like hot cakes, and those aren’t targeted to the rich and famous. They’re for well put individuals who can’t afford buying an original Hirst or a Murakami and are glad with a numbered copy (for example [1], [2]).
Art belongs in what economists call “positional goods” that is possessions that signify wealth and power. You could buy a lot of things with $20 million but nothing could make you standout like a Picasso or a Rothko.
I'm part of the richest 1% of the planet and though from a strictly monetary point of view I could afford a $20k art print it's far out of what I'd consider reasonable. People buying these prints are really, really rich. Maybe not filthy rich, but rich nonetheless.
Well I’m not in the richest 1%, far from it, but I own a numbered reprint of a Murakami (bought for about €3k). I didn’t buy it as an investment, thus reasoning has little to do with it. I bought it because the original costs north of a million and I couldn’t afford it. And since posters and such aren’t produced for contemporary painters, at least not in the quality of a lithography, I chose to buy a numbered reprint. And I love it every time I see it.
Art has nothing to do with value scale. It’s all about falling in love with a piece. Sure, a guy who pays $70M for a Rothko does it as an investment and possibly to show off, but to most people art is about gut feeling. I had the good fortune to meet people who sold their art through the November auctions. They described the process as a heartbreaking one. Parting with a masterpiece, regardless of the money, is always a hard choice. So no, art may costs a lot but it’s not just about the money.
By the way, I wouldn’t buy a $20k reprint either. I could find much more interesting original works at this price range. There’s a lot of art out there and Internet has worked miracles bringing it to the surface.
Look at any photograph or work of art. If you could duplicate exactly the first tiny dot of color, and then the next and the next, you would end with a perfect copy of the whole, indistinguishable from the original in every way, including the so-called "moral value" of the art itself. Nothing can transcend its smallest elements.
To add some context which my sibling commenters seem to be missing -- this is a quote from the game Alpha Centauri read upon discovering the "Nanoreplicator" technology. Furthermore it's from a manifesto called "The Ethics of Greed".
Paintings are actualy three dimensional objects. They consist of layers of paint with varying thicknesses, transparecies, texture and even shape from the brush bristles. The only way to recreate it would be by layering at the molecular level, and even then you'd need to know exactly what molecules are where inside the structure of the paint before you could duplicate it. We don't even have the analystical tools to do that, let alone the manufacturing ones.
And then of course there's the fact that not all art is paintings and photographs.
Well its more difficult than that, there is texture too, and other aspects. And frankly no one is ever going to bother to reproduce accurately the artworks I have on the wall, and it would cost more than the originals to do so.
Very important people line up differently from you and me... they get as close to the door as they can, claim a patch of available space as though it had been reserved for them, and maintain enough distance to pretend that they are not in a line.
Same thing is happening in ancient coins. Rich people are looking for safe assets to store wealth to avoid taxation/confiscation as governments worldwide hunt for revenue to prop up the unsustainable welfare state.
