Cheap Money No. 2
Nelson Saiers
A picture is worth a thousand words. And the cash in your wallet is worth less than you think.
That’s the message that hedge fund manager turned guerrilla artist Nelson Saiers is trying to get across with his latest installation at Wall Street’s Charging Bull sculpture.
Saiers is best known for the giant inflatable rat that he emblazoned with bitcoin’s programming code and erected outside the Federal Reserve’s headquarters in Washington DC three years ago.
“Warren Buffett called bitcoin ‘rat poison squared’,” the artist told CoinDesk at the time. “But if the Fed’s a rat, then maybe rat poison is a good thing?”
Now the so-called Warhol of Wall Street is turning his attention back to New York’s financial district. ‘Cheap Money No. 2’ consists of a vintage gumball machine with an “Out of Order!” sign crudely taped to the front. The gumball containers are filled with $2 notes that are on sale for $0.25 – a not-so-subtle swipe at the Fed’s penchant for cheap money, or ultra-loose monetary policies that keep the economy on life support by eroding the value of everyone’s savings.
If, like me, you’re skeptical of modern art then you might, initially, feel underwhelmed by the work’s simplicity.
But any deflation must be set against the abject failure of the mainstream media to educate consumers about the toxic effect of cheap money on their financial health. Official inflation rates have now reached 6.2% in America, 4.2% in the UK and 4.1% in the EU. Unofficial rates that include investments like property are much higher. The underlying causes may be open to debate, but it’s a pretty safe bet that the Fed’s obsession with money printing hasn’t helped matters.
Worryingly, there’s also strong evidence that the Fed is actively trying to suppress the general public’s understanding of the issue. Why else, for example, would it have reduced the frequency with which it publishes M1 and M2 money supply data this year, ending more than four decades of transparency?
The respected economist Steve Hanke – no fan of bitcoin, but also no lapdog of the Fed – alluded to this in his interview with Kitco in April (the full video is well worth watching if you have 20 minutes to spare).
“[Fed] chairman [Jerome] Powell has very explicitly claimed that money doesn’t matter in recent testimony,” Hanke noted. “He’s basically said that money and the measurement of money doesn’t really matter because it’s unrelated to inflation.
“In principle, they don’t think [this data] is important … Their preference would probably be to not report any monetary statistics.”
Small wonder when you look at what Powell and co. have done to the money supply: 37% of all the US dollars circulating in the economy today have appeared out of thin air since February 2020, when the Fed cranked up its money printers in response to covid-19. Unless your bank balance has also ballooned by 37% since then, it’s you that’s getting the short end of that stick.
Look again at Saiers’ installation, and its simplicity starts to feel like a virtue. Where journalists, politicians and central bankers have failed to acknowledge the problem, he’s illustrating it as unambiguously and intuitively as possible.
There’s more going on with the piece, of course. ‘No. 2’ was preceded by ‘No. 1’, which had $10 notes – rather than $2 notes – stuffed into the gumball containers. The denominations are a nod to the early economic policy debates between America’s founding fathers Thomas Jefferson and Alexander Hamilton – so says the artwork’s press release, anyway.
For me personally, though, it’s the visual impact of the ‘Out of Order!’ sign combined with the logical ouroboros of the machine’s pricing that resonates loudest.
To appreciate this you need only contemplate what would actually happen if you purchased a gumball container.
On first impressions, you’d be delighted to acquire a $2 bill for a quarter. Yet, for the transaction to occur, it’s inescapable that the market value of this $2 is actually the $0.25 being handed over. What, then, to do with the $2? Certainly not buy $2 worth of goods, because it’s not worth that much any more. Perhaps you might exchange it for $16, then? Fine. And again. And again – as often as you like. But no matter what sum you end up with, the cash will only ever buy you $0.25 worth of goods; nothing has changed except your willful debasement of the currency you’re using. Are you listening, Chairman Powell?
Saiers walked away from a highly lucrative career in finance in 2014 – having been managing director of Deutsche Bank AG and chief investment officer of Saiers Capital – in order to pursue his passion for mathematical art.
“What you daydream about typically tells you what you’re most passionate about, or you love the most,” he says in the press release for ‘Cheap Money No. 2’.
“I never didn’t want to run a hedge fund. It’s a great job. I was just more passionate about being an artist.”
