The economic collapse is hitting the art world in some surreal ways. Gagosian Gallery in Los Angeles has just had to postpone a planned exhibition, by the maverick performance and conceptual artist Chris Burden, that involves the use of 100kg of gold bricks. Gagosian purchased these – wow! How much does 100kg of gold bricks even cost? - from a company called Stanford Coins and Bullion. This company is a subsidiary of Stanford Financial Group, that is, it's part of the empire of Texas financier Allen Stanford who is now at the centre of a massive fraud investigation. Now, announces Gagosian, "the gallery's gold has been frozen while the SEC investigates Stanford."

So the stories are spinning as the marriage of art and money unravels. Not so long ago the British painter Leon Kossoff held an exhibition at the National Gallery. His drawings after the Old Masters got almost no press attention that I can recall – yet Kossoff is a veteran artist with great achievements to his name. He has painted the life of London's East End with a sombre honesty and compassion. Artists such as Kossoff, or Frank Auerbach, or Paula Rego are a lot less fashionable today than artists who do things with gold bricks.

Why is that? No, it is not because they are "figurative". Marc Quinn is figurative; Antony Gormley is figurative. What makes artists such as Kossoff seem out of date? It is their melancholia. The contemporary art world can cope with melancholy as style, but taste revolts at the reality of sad, severe, serious life in these painters' work. The problem is, you can't parlay it. You can't fantasise on it. The authenticity of these artists annoys us because it tells us there are realities that rule us, The world, since the 1980s, has stopped believing in such a thing as reality. Money was unleashed from facts of any kind. Art became its delusive mirror.

Art is fun, it's a laugh, it's entertainment, it's spectacular, it's cool ... art now aspires to be all the things fashion is. And so it cannot accomodate the awkwardness of a Kossoff: cannot be a bone in anyone's throat. Its success is totally bound up with the same fiction that anything is possible that has inspired banks to lead us all into a looking-glass world. I've tried to resist this fact for a few months, but I'm done with illusion. Art as we know it is finished. It is about to be exposed as nothing more than the decor of an age of mercantile madness. On what bedrock might a new art arise? Anyone for Kossoff?