Ambrose Evans-Pritchard, writing in the Telegraph, marks five years since the financial crisis began when it became clear that housing debt would become a liability for banks. Here he diagnoses the cause of the crisis—too much savings—and predicts the inevitable solutions:
The world savings rate has crept up to a modern-era high of 24pc of GDP. That is the most important single piece of information you need to know to understand the great economic drama we are living through. […] The emerging powers built up $10 trillion of foreign reserves — ie bonds — in a decade. They flooded the global bond market. […] Western multinationals played their part in this saga. They drove up the profit share of GDP to historic highs, playing off wage rates in the US and Europe against cheaper labour in China, Latin America, or Eastern Europe. That too concentrated wealth among those who tend to buy shares, land, and Impressionist paintings, rather than goods. [Emphasis added] […]
Much of the debt will have to be written off. Whether this done by inflation (1945-1952) or default (1930-1934) will be the great political battle of this decade. Pick your side. Pick your history
For our purposes, the interesting question is not which history but whether art can come through this process unscathed. If inflation is the solution, art will appreciate (eventually) along with inflation though there will be a lag when cash is scarce to devote to buying art.