Sunday, November 4, 2012

Another Gold Hater Comes Out of the Closet: Mark Cuban

This really shows how idiotic Cuban is when it comes to gold. No one offered to pay for gas with Dallas Mavericks tickets either. If one showed up to get to the front of the line with a one ounce gold coin or 4 tickets to a Dallas Mavericks game, which do you think a person would take to allow someone to take his place at the front of the line.

When you have a good money (gold) and a bad money (Federal Reserve notes) you always spend the bad money , and hold on to the good money.

If someone tried to pay for season tickets, with gold coins, to the Dallas Mavericks 2012-13 season, how long do you think it would take Cuban to agree to accept the gold? If someone tried to pay for season tickets to the Mavericks, in exchange for the same amount in season tickets of the Golden State Warriors, how long do you think it would take Cuban to say "no."

Through a very long process gold (and silver) have emerged as money over the centuries. Ludwig von Mises via his Regression Theorem explained how this occurred.

The wiki on The Theory of Money and Credit provides a quick overview:
This [The Theory of Money and Credit]  is Ludwig von Mises' first major work, originally published in German in 1912 as Theorie des Geldes und der Umlaufsmittel. It has ever since been recognized as a basic textbook of monetary theory. The most important theoretical contribution was to integrate monetary theory with general utility theory. This had been considered an impossible accomplishment, since money is (aside from its value as a commodity) valued for its purchasing power. How then can it have a utility of its own? Mises solved this problem through the monetary regression theorem, developing the earlier work of Carl Menger. He showed that the purchasing power of money at a particular period or "day" stems from its value the preceding "day." This process goes back until one arrives at a value due entirely to the monetary commodity's value as a non-monetary commodity. Money was then originally a commodity like any other.
Although, it is clear, given his snide remark, Cuban doesn't understand the regression theorem and its providing of a sound scientific basis for gold as a currency, he note doubt would act as the Regression Theorem suggests and accept gold coins in payment from one who would want to pay for Mavericks season tickets with gold. In other words, the theory is stronger than Cuban's mouth.

(ht Stephen Davis)

1. Tweet this back to him Robert.

2. If I really, really, had to really get to the front of the line, MC, I'd just bring a gun.

1. Rarely a good strategy. You lose your advantage when whipping out your gun to others who keep theirs concealed.

'An armed society is a polite society.' -- RAH

3. Cuban is apparently not familiar with Gresham's Law.

You know, it would be nice if for once human knowledge would build upon itself and thus increase, but it seems that this hurricane has helped to squash any hopes that I have of that ever happening. I've always sort of wanted to deny it, but Rothbard's "zig-zag" theory is correct.

4. @pete_earle has been following the black market in NYC-burroughs gasoline and tweeted this earlier today: https://twitter.com/pete_earle/status/265113928391081984

"Rockin'! In the NY/NJ gasoline black market a guy seeks to trade 500 gallons(!) for a mint \$20 #gold double eagle. #sandy #austrianeconomics"

I wonder why people like Cuban feel so threatened by gold.

5. One doesnt even have to understand the regression theory to understand the value of gold as currency.

All one has to do is spend 30 minutes googling the history of fiat currency versus the history of gold to see which is the superior & long term viable currency.

Cuban is not just an idiot on this topic, he is a lazy idiot.

6. Excellent post although the Regression Theorem is wrong and didn't account for a new commodity being created specifically to be used as a better medium of exchange:

Bitcoin and Why Mises’ Regression Theorem is Wrong

1. There is no contradiction between Bitcoin and the Regression Theorem. The Regression Theorem does not say that goods must have a direct use in order to become a commonly accepted medium of exchange, but rather that they must be demanded for reasons other than exchange value. Thus the existence of Bitcoin is not necessarily in violation of the Regression Theorem.

2. Bitcoin actually meets the Regression Theorem.

Currently the utility of bitcoin comes from providing an alternative medium of exchange that NO OTHER currency provides. This tool to exchange value itself becomes valuable as people gain more confidence in it and start storing it for future exchanges.

Think of it like a hammer that is used to bust through various government sanctions. It's a pretty unique hammer that people use to break through barriers of trade. Pretty soon that hammer itself becomes money.

In a purely free society, bitcoin would probably not emerge as money. But in our current society, bitcoin is the aforementioned hammer, the tool currently primarily suited as currency (i.e. for exchange) that has monetary potential.

3. Bitcoin meets the criteria for the Regression Theorem because it provides a way to transact privately, which has value in itself. I am not entirely convinced people use Bitcoins as money though. It seems like they are more often using it as a method of payment, like Paypal, where they buy the amount they need and use them immediately. Anyone who is hanging onto Bitcoins is probably trying to get in early so they can cash out at a profit when it becomes more mainstream.

7. This tweet by Cuban has to be one of those idiotic thoughts you get when you've had too much to drink and a key board in your hand. I don't care for him personally (he's too full of himself), but I find it hard to believe he is as stupid as this post makes him out to be.

8. actually i understand it completely. I made my point in 140 characters or less , as you picked up on. While you all believe that history will repeat itself, i do not. Gold as currency worked when there was no way to convey data about the world. If you cant communicate with the rest of the world and know what is going on , trust gold.

I dont know if bitcoin becomes the alternative, but i know if the value of the US Dollar went to zero there is a very strong likelihood that every currency would also become valueless. When that happens. gold would not become the default.

Why ? The very systems that you all rely on to value gold would be so upside down that you wouldnt be able to value it. Which in turn would lead people to a pure barter system, not a currency based on gold or gold as currency

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1. *While you all believe that history will repeat itself, i do not.*

Egads man(assuming you are Cuban), you are really on the wrong side of the bet on this one. At least if nothing else you seem to know the odds and the historical outcomes.

2. * if the value of the US Dollar went to zero there is a very strong likelihood that every currency would also become valueless. When that happens. gold would not become the default.*

*The very systems that you all rely on to value gold would be so upside down that you wouldnt be able to value it. Which in turn would lead people to a pure barter system, not a currency based on gold or gold as currency*

Mark(assuming it is really you),

If you look into the history of fiat currency destruction is has several phases which usually ends in a brief barter system(black market might be a better term). Because *money* is a convenient form of exchange and allows for division of labor it always pops back up, and govts all do the same thing for credibility, they put their *new* currency into place backed by silver or gold. The markets for 5000 years have always been able to revalue gold/silver.

Why you do not allocate a minimal amount of your vast resources(say 10%) as *insurance* to such an event is beyond me. I do so as a part of my business plan(although my business is small compared to yours) and I have had the benefit of watching my insurance holdings triple since 06.

It seems like you are making a needless gamble to me given your knowledge of the history of fiat currency. I hope it is not for ideological reasons. (I am assuming you have not invested in gold/silver based on your comments/beliefs, obviously I could be wrong)

3. "I hope it is not for ideological reasons."

It seems to me it is:

"Gold is a religion; it's not an asset class. It is always a bubble, so I am a sell."

That's Cuban in 10'
http://www.forbes.com/2010/01/01/billionaire-predictions-2010-wealth-mavericks-cuban.html

It's kind of funny that he's accusing those holding gold as being religious(cultish) about it; I find that they are pragmatic/looking at it from a business standpoint. If anything, his refusal to make it part of his portfolio is obviously based on something more than a critical business perspective-so it seems it's like the pot calling the kettle black.

When he made that statement gold was around \$1080/ounce. LMAO!

Anyway, it is obvious he doesn't own gold based on his comments. Really, he's great at so many thing-especially in startups surrounding internet technology, etc. He's a good serial entrepeneur, but that doesn't mean he gets everything "right". Let's just hope that when the music stops he isn't prodding government to save him a chair and screw those that were prudent(by holding some gold/silver)-he claims that he is "libertarian"...so we'll see how far that belief of his will really go if/when things get wild and he hasn't prepared at all.

I can respect an entrepeneur, I can't respect a crony capitalist(see Warren Buffet, et al).

4. You don't understand. You currently think fiat notes are the ONLY way to value gold. If FRNs became worthless, so long as there is no government intervention, people will start evaluating goods in terms of ounces of precious metals.

(In fact, there's gold and silver price manipulation in Comex, but that's another discussion; suffice it to say the exchange rate between PMs and dollars isn't freely determined; the fact that commodities and futures exchanges are highly regulated and that you cannot create your own or people freely exchange in general is one indicator)

"Which in turn would lead people to a pure barter system, not a currency based on gold or gold as currency"

This is ironic. Fine, let's say everything crashed and we returned to barter. As people find a medium more convenient to satisfy the double coincident of wants, people start trying out various things, like salt, tobacco, etc. But then they realized that such a medium requires certain properties, like being durable, divisible, fungible, etc. so even diamonds or gemstones won't work (not divisible; smash a diamond and it's value is not the same as its shards/parts combined). Guess how gold and silver emerged as money in nearly every society for thousands of years from this barter society.

5. ^^^ THIS MAN SPEAKS LOGIC AND REASON...

9. "... While you all believe that history will repeat itself, i do not..."

Sounds like, 'It really IS different this time.' Sounds like the Wall Street analysts during the Internet bubble, realtors during the housing bubble, and The Fed with QE3 now.

We will see, Mark. I placed my bet, on gold and silver, back in '04. I feel very comfortable with my bet. I think that history does, largely, repeat. Thus, I expect gold and silver to return to their rightful place as money, and for the current dollar and all other unbacked currencies to fall to being used, ultimately, as nothing more than fire tinder.

10. Even in his own realm, this is the same clown who let Steve Nash go because he had "run the math numbers and Nash was only going to decline in the future" and then Nash won two MVPs after going to Phoenix! He turned a mediocre team into a legit title contender every year, and Nash leaving Dallas over the objections of Don Nelson cost the Mavs at least one title, probably two.

Cuban also was the genius whose team won the NBA title a couple years ago largely based on a team that he did not assemble, but that Don Nelson's son did, and then Cuban stepped in last year and completely gutted the team. He got rid of Tyson Chandler and JJ Barrea, the main additions besides Dirk on why they won the title against Miami, and signed Lamar Odom! Odom ended up being the biggest flop in recent free agent NBA history, while Cuban held out hope that Deron Williams or Dwight Howard would sign this year with the Mavs.

Neither did, so Cuban literally took a NBA championship team and turned them into a team that barely made the playoffs and was swept in the first round the next year! Even when it comes to basketball, Cuban is a complete idiot as I just demonstrated above. He should easily have had two more NBA titles to his team had he not let Nash and Chandler go. I don't even have to get into the stupidity of firing Don Nelson for that little general idiot coach!

Why would anyone listen to Cuban on macro econ when he doesn't even understand the business he is in?

11. Cuban is a fool. Gold is a store of wealth. As if someone is going to use a \$1500 gold coin to buy \$80 worth of gas! Small purchases is what silver is for. If the average John Doe knew what was going on, he would have gold and/silver and would be at the front of the line. What? Someone already thought of that? Yep. Seeing is believing: http://goldnews.bullionvault.com/silver_price_gas_prices_080220115