Art and monetary policy

About twenty years ago Danish artist Lars Kræmer started the Artmoney project. His idea is for artists to make small, bank note-sized pieces of art with a fixed value of two hundred Danish Kroner. These pieces of arts can be then be used to pay for goods and services. According to Wikipedia about 1,300 artists in 40 countries participates in this project and there have been exhibitions of artmoney.

This raises the question whether art could play a role in a nation’s monetary and fiscal policy. Basically monetary and fiscal policy is about increasing and decreasing the amount of money in circulation, the so-called money supply. The idea behind this policy is to stimulate the economy or to stem inflation.

In order to increase the money supply the National Monetary Authority could buy works of art. This will put money in the hands of artists to purchase materials and to finance their living. This way money would circulate through the economy.

Next question is what the National Monetary Authority should do with the art it purchases. A few options are: simply to store it, to decorate government buildings, donate it to art libraries or to sell it. Of course more options are possible and they can be used in combination.

The sale of art by the National Monetary Authority would provide it a method to decrease the money supply. One way could be as follows. Once the NMA decides there is too much excess money, it will organize an auction for a part of its art collection. As it will be primarily the wealthy who will buy this art, the effects on the less affluent part of the population will be minimal [1].

Several issues have to be decided if art would be a tool for monetary policy:

  • the total amount of money to be spent to purchase art;
  • the total amount an individual artist is allowed to sell;
  • the price to be paid for a single piece of art;
  • what kind of arts could be bought.

The first three questions can be answered on the basis of economic considerations, but the last one is inherently subjective and will be subject of a perpetual debate. Nevertheless, some rules should be established here.

An art library is an organization which lends art to members of the public. This way a larger part of the population can afford to have art in home. There are several benefits of having art libraries to manage to art collection. Not all art could be sold for premium prices and conventional storage requires a lot of space and associated security measures.

What is artmoney? – official website

Notes

[1] The conventional method to decrease the money supply is to raise tax and interest rates, which primarily hits the middle class.

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