UPDATED May 4, 2012
If you want to know where the dollars created out of thin air from quantitative easing go, I have the answer: to people in the financial markets. Evidence of this is the art market which I keep a lazy eye on. Today Evard Munch’s famous ”Scream” pastel drawing sold for $120 million at a Sotheby’s auction. The rumor was that it was an American buyer. According to a WSJ report:
“There’s a lot of money out there now, and it doesn’t take many billionaires to push up a price,” Chicago collector Stefan Edlis said before the sale. “You can only buy so many yachts, and a painting is so much better to look at than a bankbook.” Mr. Edlis, who five years ago sold his Andy Warhol piece “Turquoise Marilyn” to hedge-fund billionaire Steven Cohen for at least $80 million, said he didn’t plan to enter the fray on the Munch.
This stuff happens during every bubble, like the one we are seeing now in the Wall Street world where the Fed’s prime dealers first get the money the Fed “prints” and then, because returns on financial assets are easier and more profitable than things like industry, the paper eventually gets spun into art by rich hedge fund guys.
Here is what Mr. X got for his paper:
Here’s the version I like:
This sale at Sotheby’s grossed $330 million! Here’s a video: