Art as Money

Consider this comment quoted on bloomberg:

“Old paintings are good stores of value,” said Beijing- based dealer Tian Kai, who attended today’s auction. “You know these works are one-of-a-kind and of superb craftsmanship.”

Store of Value describes market worth in the future, and is front and center in the conversation about money. A good store of value is something that you can sell for the same (or more) for something else considered valuable (like dollars, or in the case of inflation, a basket of real goods).

The dealer almost in the same breathe describes an old painting's monopolistic hold on its intrinsic value. Alas, if Van Gogh wanted to make a million bucks while he was still alive, perhaps he could have cut his hands off instead of his ear.

Not surprisingly, bankers have had a fascination with art since at least the pre-Renaissance. The Mendici's tried to buy their soul back from their usury ways and funded religious and enlightenment art in the process. And bankers today, not as concerned with saving their intrinsic soul, consider paintings as bonds to hang on the wall, to sell off in the future. Gold in vaults are just not as sexy a woman surrounded by beauty.

This all makes me wonder about the design of money, and stores of value. Art Price Insurance, a little derivative paper that guarantees a high price for your new art, could be a great hit with bankers contemplating auction bids. The confidence in the value of the art can be reaffirmed by the seller, if they (or someone on their behalf) was willing to take the art back in the future (perhaps at some annually discounted rate). Just like how a bank will take back your money at face value.

Could money have intrinsic design value built into it? Transform a masterpiece into not just a store of value, like gold in a vault, but a medium of exchange, through a limited print edition fractional reserve system, where art money is guaranteed in value by the gallery. I'm sure artists would get excited that they might finally be able to make some money. Literally. Now if they're only willing to cut off their hands to prop up prices.