The older we get, the younger we are. We have been laughing at the Chinese…for it is obvious that they are new to the ways of runaway markets. Throwing off their drab Mao suits…and fresh off the farm…these bumpkins act as if they fell off the turnip truck just last week.

But it is we who must have been born yesterday. We open our eyes, look around - the more we see the less we've seen anything like it. More details on last week's art auctions have come our way…each one increasing our puzzlement.

Mao to the left of us…Mao to the right…he's almost as big as Che!

Only seven months ago, art lovers took a look at one of Andy Warhol's concoctions and judged it to be worth $17.37 million. It was a photographic portrait of Mao Tse Tung, taken out of a 1963 edition of Newsweek magazine, and then silk-screened, multiple times, over a green background. Warhol was an adman. He knew a good image when he saw it.

But how he transformed his slick images into collectible 'art' is one of the greatest triumphs of mass marketing and mass delirium in history. The International Herald Tribune struggled to explain it: Of the Mao confection, "the uneven repetition conveys the impression of a recurring obsession that the viewer in vain seeks to shake off," it says. Or the impression that Warhol didn't apply the ink very well.

But now, in May of 2007, a group of bidders - everyone of them apparently of sound mind - ran up another of Warhol's works to$71.7 million, a new record, and more than four times the previous record. This second Warhol masterpiece is reproduced for us in Friday's IHT. It is a photo of a burning car tinted all in green. Warhol, stretching the limits of his creative genius, called it "Green Car Crash (or Green Burning Car)." It was last seen at auction in 1978, when it went for just $70,000. In 30 years, it has gone up 100,000%.

What else has gone up 1,000 times in 30 years…or more than 300% since last November? We can't think of anything. Which must mean that these art buyers are even smarter than the Chinese lining up to open brokerage accounts in Shanghai…or luckier.

Chinese shares hit another record high yesterday, after a sharp drop Friday. The market shuddered at the end of last week because the Peoples Bank of China said it was raising interest rates - to try to sop up some of the speculative juice in the market. But it's a bubble; and in a bubble all news is good news. And so, Monday, the Middle Kingdom rocked and rolled, ending the day with stock prices more than 1% higher than the previous high.

Meanwhile back to the world of art…

The auction at Christies "exceeded the experts' highest expectations, [and] revealed a hitherto unparalleled urge to buy," IHT concluded.

We conclude something a little different.

First, we look at the paintings. Some are cute. Some are clever. Some are decorative enough for a laundry room. But who would spend serious money to buy them? We don't know.

But what we do know is that whatever value buyers saw in Warhol and similar artists a few years ago, they see a lot more of it now. Prices have gone up dramatically in the last few years. Remember, these are objects with no 'earnings' - save the pleasure owners get from looking at them. Since the paintings themselves have not changed, we have to conclude that the buyers have changed. For some reason, as yet unexplained, they want to own these paintings more than they did before…as evidenced by the fact that they bid against each other to see who is willing to pay the most to take them home.

So remarkable is this whole phenomenon to us that we decided to spend the whole of last night in meditation and prayer, trying to make sense of it. Unfortunately, the whiskey ran out by 11 PM…so we went to bed without getting to the bottom of it.

But even in our few hours of contemplation we were able to realize that OECD is probably right. Cheap money is making a lot of things a lot dearer than they used to be - especially status. Landmark buildings all over the world are being sold at prices that were unheard of a few years ago. Rent yields are so low…it looks as though the buyers want to lose money. Luxury yachts are crowding harbors from St. Tropez to Santa Monica.

Stocks, too, are hitting records - and not only in China. The S&P 500 hit a new high yesterday too - breaking a record set seven years ago. Meanwhile, oil has climbed over $70 a barrel…but still, at the top end, gas-swilling private planes are becoming much more fashionable. "The popularity of executive jets has never been stronger," says today's Financial Times. But pity the poor status-hungry hedge fund manager. He puts in his order for one of the leading models, and then discovers he has to wait a couple of years to get delivery. What's he going to do? Go to Christies and buy a Warhol?

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.