Ashley Revell from London had a wild idea that he couldn’t shake off.
It was 2004, and the spark for this unusual notion came from a casual drink with a friend. Revell found himself captivated by the concept.
In essence, the plan involved selling off all his belongings, heading to Las Vegas, and wagering everything he owned on a single spin of the roulette wheel. While the idea was sheer madness, Revell had just the right amount of audacity to follow through.
Over a six-month period, Revell divested himself of all his possessions and made his way to the Plaza Hotel and Casino in Las Vegas. On a Sunday morning in April 2004, with his parents and a film crew capturing the moment, Revell placed a staggering $135,300 on red.
What transpired next? Here’s Revell’s account:
“That spin was the most incredible moment of my life. It may sound like a cliché, but time felt like it stood still. There was an overwhelming sense of calm, as I had done all the hard work.
“Everything had been sold. I had no possessions left. I had already made the decision to go with red or black. There were no further choices to make – it was a profound feeling of freedom.”
“As the ball spun and finally settled, I thought it landed on red, but it briefly slipped from view. When the wheel came back into focus, there it was, resting on number seven. It was red.”
“A crowd had gathered, and they erupted in cheers. I joined in the celebration. Someone rushed in with champagne, and everyone was ecstatic. I had won £153,680 [$270,600]. It was a wild moment of pure joy.”
Revell was undeniably fortunate. He could just as easily have lost everything with this high-stakes gamble. What would have become of him had he done so?
He would have found himself an instant fool, completely broke.
Art Fad
Speculative manias always gain traction through the rise of money and credit. A look back at historical manias reveals a familiar pattern.
Take, for instance, the tulip mania in Holland during 1636-1637, which was fueled by personal credit. At its peak, sellers often had no bulbs left…yet buyers made down payments using personal possessions or other commodities because they lacked cash.
Similarly, the Mississippi Bubble from 1718 to 1720 was inflated by paper notes from John Law’s Banque Générale, later known as Banque Royale. The housing market bubble between 2003 and 2007, much like what we see today, was enabled by low interest rates and a surge in credit through mortgage-backed securities.
The objects of speculation – whether it’s canals, railways, IPOs, or electric vehicles – may evolve, but the boom-and-bust cycle remains the same. Art, however, is a perennial favorite among speculators!
For example, in 2006, amidst a climate of cheap credit, there was the infamous “$40 million elbow” incident. Casino mogul Steve Wynn accidentally put his elbow through Picasso’s canvas of “Le Rêve.” After the distinct sound of ripping, Wynn reportedly expressed, “I can’t believe I just did that.”
Now cheap credit has ushered in the age of digital NFT art. NFT, short for non-fungible token, has taken the art world by storm.
The “WarNymph” NFT collection by Grimes, associated with Elon Musk, recently fetched $5.8 million. In another instance, a group of crypto advocates streamed the burning of a print of Banksy’s “Morons.” They then created an NFT called “Burnt Banksy” to symbolize the artwork – the recorded event was shared on the Ethereum-based OpenSea marketplace.
The individual who ignited the flame explained:
“The idea behind this is that if we had both the NFT and the physical piece, the value would predominantly lie in the tangible piece. By eliminating the physical element, only the NFT remains, which ensures its authenticity due to the smart contract on the blockchain.”
“This way, the value of the physical piece will shift to the NFT, becoming the sole representation of that piece. Our aim is to inspire; we hope to motivate technology enthusiasts and artists to explore new forms of artistic expression.”
Feeling inspired?
At the time of writing, the auction for “Burnt Banksy” remains active. We would estimate its value at over a million dollars. Where do you stand on this bet?
Betting the Farm on Moonshots
Wagering your life savings on a roulette wheel or in the realm of digital NFT art is undeniably reckless. Yet after a decade of bull markets that have culminated in an actual bubble, anything can happen.
Millions of Americans are taking gambles akin to what Revell did, but they’re using their retirement funds instead. They believe they can achieve returns that far surpass merely doubling their investments. And the best part? They don’t even need to step foot in Las Vegas.
Currently, fueled by an infinite supply of low-cost credit from the Federal Reserve, speculation is running rampant. There are numerous avenues for investment that one can explore from the comfort of home.
From technology stocks to cryptocurrencies, special purpose acquisition companies (SPACs), and NFT art, the options are endless. Indeed, the final stages of a credit expansion often lead people to engage in bizarre behaviors.
Today’s mindset isn’t just about doubling your money. Such meager returns are seen as lackluster. Modern speculators are aiming for astronomical gains, seeking moonshots that promise overnight returns of 10x or even 100x.
With stories circulating of friends and neighbors multiplying their wealth through cryptocurrencies and tech stocks – like Tesla – many are clamoring for their chance at striking gold.
But wait! Tesla shares soared to $900 on January 25, only to drop over 30 percent thereafter.
Is this merely a temporary dip for Tesla before Congressional stimulus packages inflate shares back up once more?
Only time will tell. Regardless, placing a bet on it would be unwise.
Sincerely,
MN Gordon
for Economic Prism
