Bubble Watch: Supercar Edition

TND Guest Contributor: Paul-Martin Foss |

In previous editions of “Bubble Watch” we’ve highlighted the markets for fine whiskey and private jets. Now let’s take a look at the latest sign of the bubble: supercars.

Back in October, the Financial Times ran an article about “Bedroom Wall Syndrome.” Men who grew up lusting after 1980s supercars are now in mid-career and finally able to start thinking about acquiring that car they dreamed about. The Porsche 959, the Ferrari 308, the Lamborghini Countach, all hung as posters in the bedrooms of young boys in the 1980s. And now that those young boys are grown up and have money, they’re bidding up the prices of those cars, sometimes even over 200 percent just last year. As the FT wrote:

Over the past five years, classic cars have received much attention as an emerging asset class. Hagerty’s blue-chip index of 25 classic cars has risen more than 200 per cent since 2009, comfortably outperforming investments in more conventional assets such as gold.

The timing of that index rise is more than just coincidental. It is quantitative easing that has fueled the financial industry, made Wall Street rich, and allowed people to bid such high prices on those cars. And like all bubbles, it will eventually pop, although hopefully the results will not be as bad as in Dubai.

Now comes news that personalization of luxury cars is at an all-time high. Once again, who is to thank for all that easy money flowing out there? The Federal Reserve. And now that the Fed is winding down its QE, the ECB is ramping up its money printing. It’s like an inflation tag team. We’ll enrich our 1%, then you can enrich yours. It’s all going to end badly, of course, because money creation like this can’t go on forever.

The only question is, since the Fed has enabled so much wealth transfer over the past years, will there be anything left for the rest of us once quantitative easing is finally over?

Images: Nic Redhead, M 93, Debar Shiray, Sebastian Cosse, Axion23

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About  Paul-Martin Foss:

Paul-Martin Foss is the founder, President, and Executive Director of the Carl Menger Center for the Study of Money and Banking, an Arlington, VA-based think tank dedicated to educating the American people on the importance of sound money and sound banking.

Prior to founding the Menger Center, Mr. Foss worked in the U.S. House of Representatives for seven years, including six years as Congressman Ron Paul’s legislative assistant for monetary policy and financial services, and one year as Deputy Legislative Director for Congressman Thomas Massie.

As Congressman Paul’s legislative assistant, he assisted the Congressman in his duties as Chairman of the Subcommittee on Domestic Monetary Policy by helping to develop hearing topics, agendas, and briefing Congressmen and their staffs on monetary policy topics. Mr. Foss also was responsible for the management of Dr. Paul’s monetary policy and financial services legislation, including the “Audit the Fed” and “End the Fed” bills, and was co-editor of Ron Paul’s Monetary Policy Anthology, a multi-thousand page compilation of hearing transcripts, lecture transcripts, and other documents related to Dr. Paul’s chairmanship.

Mr. Foss received his Bachelor’s degree from The University of the South (Sewanee), and Master’s degrees from the London School of Economics and Georgetown University’s Edmund A. Walsh School of Foreign Service.

This article appeared on the Carl Menger Center for the Study of Money and Banking and is reprinted with permission, “Creative Commons 4.0.”