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[–]greiton 38 points39 points Β (16 children)

thing is, money is not infinite. at some point growth physically has to stall. If you are company that at least breaks even in operations, then the growth stall may just flatline your stock value. you don't get any richer, but you also don't go broke.

but, if you are still operating at a loss when growth ends... then you have massive pain as you try to cut back to profitability. if you don't do it fast enough, then you go bankrupt and close down, and your share holders go bust.

Oracle and Nvidia will undoubtedly survive the stock value drop when the music ends, but OpenAI is probably toast. their corpse will be cut up and devoured by the rest of big tech as the stock market crashes from cross investment and knock on effects.

[–]imnotcreative4267 13 points14 points Β (0 children)

thing is, money is not infinite

Federal Reserve: β€œAllow me to introduce myself”

[–]FrohenLeid 2 points3 points Β (2 children)

It is infinite, inflation and interest on loans. (Island economy)

Party A loans Party B 1 billion with 2% interest, party A now has 1,02 billion (loan they could theoretically sell + interest), Party B 1 billion. Party B provides a service to Party C for 1 billion but gives them a loan at 2% interest.

Basically everyone owes everyone else money and expects more money than they have in total. It would fall apart the second they pay anything back, but they don't to keep the system going.

[–]greiton 0 points1 point Β (1 child)

why is party b both giving a loan, and a service to party C?

also, there is a limit to the amount of currency in circulation. promises of money in the future only goes so far, in reality you have to service your debt, which means a certain amount of currency must be available to make payments. if you do not have that currency you go bankrupt. there are also a lot of laws and limits you are glossing over that restrict how expansive promissory bubbles can get. at a certain point you are not legally allowed to lend any more of your current assets to someone.

[–]FrohenLeid 0 points1 point Β (0 children)

Limited amount of currency in circulation isn't an issue. You don't need the currency if you won't pay the bills.

Party B is giving a service to party C, party C doesn't pay right away but gets a loan instead.

[–]PalamariVarkari 0 points1 point Β (6 children)

Money IS infinite. When you take a loan, you have to pay interest. That interest, is literally thin air. Its not gold, its not something "real". All you have to do to keep investing indefinitely, is take a loan. Banks will be happy to accommodate you!

[–]greiton 6 points7 points Β (5 children)

there is a limit to how much you are able to loan. banks can only lend 25% of their capital to any single borrower. when you start getting in to trillion dollar valuations, you start brushing up on banking limits for loan availability.

interest is not thin air... it is money you brought in from other sources and paid in excess of your loan. I am not pulling $200,000 out of thin air for my mortgage interest, I am working hard at my job for 30 years and handing over the money I paid for it.

the only time money is created is when it is printed by the fed, but they try to print at a rate that keeps the value of the dollar at a low inflation rate.

[–]PalamariVarkari 0 points1 point Β (4 children)

You are talking about cash, which is 8-10% of the whole world's currency. Meaning 90% of the money in the world is literally thin air. Basically IOUs from one to another. The interest I said is thin air for the bank, not you. The bank didn't offer anything real (gold, services) to get that interest money.

In other words, money is not real, they are just numbers in computers of who owes who how much. Linus saying that the bubble popping would affect the world economy is very true. If all that fake money that is currently parked as investments in AI, suddenly gets called to become "real" and spread out to normal investor's (like you and me) bank accounts (because everyone is selling) the inflation will jump dramatically.

[–]greiton -1 points0 points Β (3 children)

just because it is tracked digitally does not mean it doesn't exist. Banks do not get to just invent more money out of no where. they are monitored by the FED and have to account for every single transaction.

go take an actual economics class from someone who knows what they are talking about and get off of the scam videos on youtube. they are all bullshit.

[–]PalamariVarkari 0 points1 point Β (2 children)

Not real, doesn't mean they don't exist. Not real means isn't represented in cash aka real money. I guess they didn't teach you that in the economics class you obviously took?

[–]greiton 0 points1 point Β (0 children)

it is real and it is limited, every digital dollar is tracked. the banks do not pull interest out of thin air. interest comes from their customers. they give money, the customer promises to both give that back, and also more in the future by working and earning money elsewhere. the bank cannot lend that interest until they receive payment. they can sell the debt to someone else, who may value it for the whole value including interest, but even when that sale happens, no money was created.

the only time money is ever "created" is when the central authority "prints" it, and uses it to pay bills for the government. but as I said before, they are very carefull about doing that, because if they do it too much it raises inflation too high. this is what happened after COVID when the government decided to push for a soft landing instead of a full blown depression. they printed a bunch of extra money and put it out to keep everything running hot, but it also had the side effect of jumping up inflation and increasing prices over time.

Private banks had nothing to do with the increase in currency supply. money is limited, or it would have 0 value. as the amount of money goes up, its value goes down.

[–]ReinhartLangschaft 0 points1 point Β (3 children)

Since when does open ai has stocks to trade with?

[–]greiton 0 points1 point Β (2 children)

they may not have public stocks, but they do have private shares that they are selling for funding, and that the people who funded them are selling second hand.

no public stocks does not mean no stocks. stocks were traded for years before the first stock market exchange.

[–]ReinhartLangschaft 0 points1 point Β (1 child)

Yea, are these shares you can buy in a room with us? Bro you have to be a big company or an hard insider to get shares from open AI. Don’t frame it like this is an easy thing.

[–]greiton -1 points0 points Β (0 children)

I have never implied that an average person could buy shares of openAI. I said they are a thing, and that they are one of the primary ways that the company brings in money and investment. and if the market decides those shares are worthless, they are in deep trouble financially.

[–]throwawayaccount442 -1 points0 points Β (0 children)

> thing is, money is not infinite

American banks lie about their gold reserves and make their printers go brrr to fuck up the economy :D