If you still think that all post Victorian art is a cynical con perpetrated by intellectual shysters on pseudo-aesthetic fools, then a 28x30in red canvas with eight horizontal slashes in it isn’t just the sort of thing that you might say your five-year-old could do — if he did it you’d send him to the naughty step with no SpongeBob SquarePants.

You would also probably harrumph at the picture’s saleroom estimate for this work of £400,000 to £600,000. And I expect you will faint dead away when I tell you that at Sotheby’s on Thursday, Lucio Fontana’s Concetto Spaziale, Attese, went for £1.6m at Christie’s with a 20% buyer’s premium on top of that. As the hammer dropped on the night it barely raised an eyebrow in the room.

After a week of modern contemporary impressionist, expressionist and surrealist art sales in London (all of which had blasted estimates and expectations through the minimal ceiling), nobody was surprised by anything. At this point we need to pause because here the news story will be conventional and, in Grub Street tradition, suck its teeth and poke fun at the amount of money and the ugly inexplicable nonsense of the art. It will go on to point out that you don’t know which way up to hang this stuff, then ask “whatever happened to good old-fashioned painting?” and “wouldn’t Turner, Monet and Rolf Harris spin in their graves?”

The tabloids have been running stories of uncomprehending hilarity at the £5.7m bid for Peter Doig’s White Canoe (making it the highest price paid for a living European artist). The Sun called Doig unknown.

But as always with art there is another way of looking at this. This week of sales has generated a total of more than £385m which is a very good thing for London, for art, for art dealers and for contemporary artists. And in no small way it’s a good thing for civilisation as we don’t quite understand it.

An enormous amount and variety of modern pictures were dispatched to London for sale. This underlines not simply the preeminence of the expertise in this city and its auction houses, but also that London is the pivot on the axis between cash and culture.

The buyers came from everywhere else. They and their dealers and minders, bidders and mistresses who descended on London because this is now the most comfortable, open, uncorrupted and exciting international city in the world. And incidentally, the women who hang around the art market are all far better-looking than those who hang around any other art form now: when I was at art school the gallery groupies all looked like lesbian tractor drivers.

So why should modern, and particularly contemporary, art have found such a bullish market? Well, to begin with, of course there is the money. The prices that so appal and amuse the tabloids are all relative. An anonymous auction house director told me that “there was no problem in finding buyers up to a million and they could always sell over the £5m ticket; it was the stuff in between that was problematic”.

There is a mammon-choking quantity of lucre around and it has to go somewhere, it needs to buy something. What makes it all seem so outrageous is that for the first time in a long time we in the meritocratic West are experiencing a Latin American-style money gap between those who have an awful lot and those who have an average income.

Soaring raw material prices around the world, emerging markets, investment banking and hedge funds have created a crowded cartel of gilded billionaires. There were a lot of Russians and Chinese in London last week, new buyers reflecting their exploding economies. They have made a vertiginous market in new Chinese art; the Far East is being particularly jingoistic about its place in the culture. But the new Russian rouble-ocracy doesn’t want modern Russian art. And American bankers are still big collectors.

One art dealer told me that the Japanese who were the big buyers in the last art boom (remember those supermarket impression-ists?) have generally not come back this time. But he added: “Look at hedge fund managers: they invest their bonuses in modern art, it outperforms everything else. Art is what the investors invest in.”

Here a relatively few people can make a market. Doig’s White Canoe was bought directly from the artist in 1991 probably for a few thousand quid. Last week it made more than £5m.

The dealer added that art is a good thing: “The greatest privilege and luxury is to be able to live with great art. It’s more satisfying than all the yachts, racehorses, sports cars, hookers and drugs you can afford.”

And there is something else that has happened for the first time in more than 100 years: the big buyers of art and the makers of contemporary art are both on the same page; they understand each other.

At the start of the 20th century, modern art became difficult, ugly and argumentative and the money began to lag behind. It would take a generation to catch up. Today living artists are in demand and are as successful as dead ones. There is an exponential market driven by the available cash. Charles Saatchi’s free website Your Gallery has thousands of artists, hundreds of thousands of pictures and more than 3m hits a day. Art is not just predicting the zeitgeist; it is the zeitgeist.

A gallery owner said: “You can’t put this booming market down to the snobbery and vanity of rich people or just as investment. There is at the moment a feeling that art more profoundly and emotionally reflects and explains what it is like to be alive here and now than any other cultural form. More than books or films or music, modern art is a collective portrait of who we are. These saleroom catalogues are our family albums.”

Doig may have the record for the amount paid to a living artist — but the greatest amount made over the price estimate last week was, I must modestly tell you, mine.

I had a painting of Stalin that I bought for 200-odd quid. It used to hang over my desk as an aid to hard work. I offered it to Christie’s to sell without reserve in its cheap and cheerful midweek sale — it refused, saying it didn’t deal in Hitler or Stalin.

So I called Damien Hirst and asked if he would paint a red nose on it — which he did and signed it. Together we consigned it to Sotheby’s on behalf of Red Nose Day. The estimate was £8,000 to £12,000, not a bad mark-up. But after ferocious cutthroat bidding and some heroic auctioneering, the hammer fell at £140,000.

There was a round of applause that did surprise the market. It was bought by an Italian lady. When they told Damien, who is in California preparing a show, he simply texted back “F*** me”.

Which could stand as an appropriate observation for the whole week.

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