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.

energy as money

Creating money out of tangible assets is nothing new. The idea to use energy as the basis of capital is novel, and this is the first project i've seen that tries to show how this might work.

If you already have Kilowatt Cards to Authenticate:

Kilowatt Cards are gift cards that pay for 10 kilowatt-hours of electricity in any home utility account (including all taxes and fees) when REDEEMED here. The cards can be redeemed by anyone to pay for household electricity worldwide. Since they can be used to pay for anyone's electricity, they can also be used to barter for other things - resulting in an international store-of-value (assets) and a stateless medium-of-exchange (electricity).

To prove that a Kilowatt Card is real and active, enter the last six digits of its serial number in this form. If the number is active, two new digits will be returned that should be written on the card by hand, forming the end of a new six-digit number, while the first two digits are cancelled. The method creates a new serial number every time, while the old number is cancelled. So nobody holding a Kilowatt Card can use copies of it, since all copies will have a cancelled serial number after any one of them has been AUTHENTICATED

This way plain paper cards can be traded widely, yet proven real by anyone with access to the internet, before they accept it.

He talks about this as a gift card, but has language of "store of value" and "medium of exchange". yes, we're talking about money here.

Despite the roughness of this project (his authentication process probably doesnt inspire trust), it's a great idea and one that could be expanded upon. he's trying to implement it in a way that gets the project off the ground quickly, and is a worthy experiment to illustrate how a money supply, oops, i mean gift card supply can be created.

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added 5/26
"The system has been operational since July 2007, when we gave away about 10,000 kWh (1,000 cards) at a Rainbow Gathering in Arkansas. Only 60 kWh of those have been redeemed so far.. The total amount in circulation today is about 30,000 kWh." - bob (founder of kiowatt cards)

Gold is Money

consider:
Aristotle's choice of money, revisited

This is a nice little comparison of different things that can have value. Durable, Portable, Divisible, and Intrinsic values are metrics that make up the important uses of money. Medium of Exchange (divisible, portable), Unit of Account (divisible), and Store of Value (Durable, Intrinsic Value).




He makes the case that many of these things in their modern form have more money like qualities . And I certainly agree, this has been where things have been heading.

Speak to a God, Gold, and Guns person though, and they might suggest that ETFs are unproven in the longer term, and while they are portable, divisible, that they are durable (try trading in your etf if the government collapsed), and the line in your account holds no intrinsic value, though it's easier to trade to something of intrinsic value (ie, it's more like a dollar, in that it gives the bearer a claim to something with intrinsic value).

So while I'd give different answers to the questions he poses, they are extremely good questions, and from a non-god/gold/gun perspective, he's absolutely correct.