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Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

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Re: Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

#41

Post by balarjin »

cousinbryce wrote: post #9
techblueberry wrote: post #2

I have a theoretical question. At what point does capitalism become the other side of the coin from communism. Like there's communism which is centralized planning and the state owning the means of production. Then I think there's Adam Smiths ideal form of capitalism that I think can loosely be described as independent demand signals allocate resources throughout the economy. What happens when a capital accumulates i…

Fun fact: Internally all corporations are organized by central planning

A given company may or may not be organized this way.

IBM had a system of "blue dollars". If the server group sells a computer, it gets revenue ("green dollars", i.e. real money). The leaders of the server group are credited some fraction of the real money as "blue dollars", which they can give to teams that enabled their success. For example, if sales are being won based on a new feature of the XLC compiler, the server group leads would recognize them by sending their blue dollars to the XLC compiler team. Teams choose what to do (and whose problems to solve) to maximize the amount of blue dollars they can get. Promotions and pay go to people who drive blue dollar "revenue" for their team.

Why does IBM work this way? It is too big to be centrally planned: If the compiler team does amazing work, and the engineers get no credit, all the smart and hardworking engineers leave. The central planners in Armonk re-invented a market economy to figure out what work matters and reward it.

Re: Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

#42

Post by text0404 »

balarjin wrote: post #39
techblueberry wrote: post #2

I have a theoretical question. At what point does capitalism become the other side of the coin from communism. Like there's communism which is centralized planning and the state owning the means of production. Then I think there's Adam Smiths ideal form of capitalism that I think can loosely be described as independent demand signals allocate resources throughout the economy. What happens when a capital accumulates i…

> What happens when a capital accumulates in a smaller pool of folks who choose how to allocate those resources. > Silicon Valley isn't responding to demand, it's essentially centrally planning where to assign resources to create demand. Silicon Valley is not centrally planned. The people at Microsoft did not go to a committee and ask the people who ran Sun Microsystems if it would be okay to release Windows NT. They…

That happened over 30 years ago. It was a different culture back then, with a lot fewer billionaires with cozy connections with the government.

Re: Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

#43

Post by ktm5j »

balarjin wrote: post #34
lefty2 wrote: post #21

So, Nvidia are backstopping $100B for the Ohio project, yet at the same time OpenAI are developing their Jalapeño processor, which will mean it will no longer need Nvidia GPUs for inference. That does not really make any sense to me.

Mcdonald's famously invested in Chipotle as a risk mitigation strategy. If consumers want healthier fast food, sales at Mcdonald's will go down, and sales at Chipotle will go up. Investing in something anti-correlated with your business lowers risk by paying you when your own business is hurt by a surprise. If you can see the future, by all means invest in the one stock that will go up the most. If you can't see the…

[dead]

Re: Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

#44

Post by fzeroracer »

noir_lord wrote: post #33
0x262d wrote: post #24

Earlier quoted context omitted.

This observation is exactly the Marxist prediction of how capitalism gradually transforms society from early capitalism, which nearly fit the Econ 101 assumptions of many small producers and consumers and such, into something that operates economically more like communism by being centrally planned, but with the severe drawbacks of a minority ruling class and being run undemocratically on the basis of private profit…

Which is what the European Socialists have been calling "Late Capitalism" since I think the 60's about the period from the 30's onwards. The problem is it's not easy to have an actual debate on this since to some folks questioning whether capitalism or this form of capitalism is serving societies needs rapidly gets you lumped in with the "communists". At some point though it becomes impossible to hide that the Empero…

Capitalism has long since embedded itself as a cult of money, which is why it makes debates around it so difficult because people believe they are the Golden Child simply disenfranchised by people refusing to let Capitalism grace them. It's evolved from the 'temporarily embarrassed billionaire' part to just outright worship of billionaires though.

Unfortunately I think by the time people recognize the emperor having no clothes it'll be too late and we'll all suffer for it.

Re: Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

#45

Post by balarjin »

recursivecaveat wrote: post #37
balarjin wrote: post #34

Earlier quoted context omitted.

Mcdonald's famously invested in Chipotle as a risk mitigation strategy. If consumers want healthier fast food, sales at Mcdonald's will go down, and sales at Chipotle will go up. Investing in something anti-correlated with your business lowers risk by paying you when your own business is hurt by a surprise. If you can see the future, by all means invest in the one stock that will go up the most. If you can't see the…

If you have extra cash and cannot spend it on your own business, you can just pay dividends to the shareholders. The shareholders are free to invest in competing businesses (or not, if they want a pure play without hedging). Turning the business into a hedge fund with the retained capital seems to primarily benefit insiders after a certain point.

> If you have extra cash and cannot spend it on your own business, you can just pay dividends to the shareholders.

That is an option. It is usually not the best option.

Dividends are taxed. You are forcing shareholders to pay a good chunk of money in taxes.

Suppose Nvidia decides not to hedge the risk that competing products eat into their margins. Some years they get lucky and are flush with revenue. Other years they have much lower revenue.

Even in bad years, they want to keep paying to make future products. Cutting employee pay or mass firings would break their engineering org. To avoid that, they would need enough cash on hand to survive several bad years. Now they can't pay dividends because they need this extra buffer of cash! Hedging is a better deal for everyone.

> The shareholders are free to invest in competing businesses.

OpenAI is not (yet) public. Most Nvidia shareholders can't choose to hedge risk by buying shares in OpenAI, or any similar company (they are all private or a small part of a bigger public business).

Re: Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

#46

Post by watwut »

arjie wrote: post #15
techblueberry wrote: post #2

I have a theoretical question. At what point does capitalism become the other side of the coin from communism. Like there's communism which is centralized planning and the state owning the means of production. Then I think there's Adam Smiths ideal form of capitalism that I think can loosely be described as independent demand signals allocate resources throughout the economy. What happens when a capital accumulates i…

That doesn’t sound right. Silicon Valley is clearly responding to massive demand for AI services. The reason Nvidia has so much money is that people are paying them for something only they can make. It’s not like they’re issuing stock into a meme stock spike or something. They’re selling hardware that companies are demanding in large quantities because those companies need the hardware to provide services that people…

They are borrowing a lot and need to hype to absurd ways to create demand. It is forced on things rather then demanded.

Re: Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

#47

Post by deterministic »

cousinbryce wrote: post #9
techblueberry wrote: post #2

I have a theoretical question. At what point does capitalism become the other side of the coin from communism. Like there's communism which is centralized planning and the state owning the means of production. Then I think there's Adam Smiths ideal form of capitalism that I think can loosely be described as independent demand signals allocate resources throughout the economy. What happens when a capital accumulates i…

Fun fact: Internally all corporations are organized by central planning

Not at all. High level objectives from above are transformed and interpreted and subdivided by lower levels into actual planning and execution.

Also, a corporation is infinitely more simple to manage than a whole country.

Re: Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

#48

Post by deterministic »

NhanH wrote: post #7
techblueberry wrote: post #2

I have a theoretical question. At what point does capitalism become the other side of the coin from communism. Like there's communism which is centralized planning and the state owning the means of production. Then I think there's Adam Smiths ideal form of capitalism that I think can loosely be described as independent demand signals allocate resources throughout the economy. What happens when a capital accumulates i…

That is the entire Marx's Das Kapital. The main argument being free market will lead to concentration of power and then capitalism collaspe. He expanded on what he thought the not-capitalism could be. Then Lenin concluded that if you will always have concentration of power and some folks doing centralized planning, it might well be the state.

Marx was extremely simple minded when it came to human nature. That’s the problem with all utopian ideas and all idealistic philosophers and economists: the assumption is always that humans will behave in some idealised way. While in reality greed, cruelty, corruption, treating other humans as inhuman or slaves is part of human nature. Not the only part of course, but probably the most important part when looking at the very long list of disaster we call history.

Re: Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

#49

Post by pseudohadamard »

techblueberry wrote: post #2

I have a theoretical question. At what point does capitalism become the other side of the coin from communism. Like there's communism which is centralized planning and the state owning the means of production. Then I think there's Adam Smiths ideal form of capitalism that I think can loosely be described as independent demand signals allocate resources throughout the economy. What happens when a capital accumulates i…

That's why you need a two-axis scale, not just a line with capitalism at one and and communism at the other. Same with politics, physically Hitler and Stalin ran a pretty similar form of government even though logically one was at the far right of the scale and the other at the far left.

Re: Nvidia Insists It Can Keep Printing Money to Fund the AI Boom

#50

Post by anon-3988 »

skybrian wrote: post #28
anon-3988 wrote: post #6

Earlier quoted context omitted.

I have a theory that this issue happens because we put money into the stock market for our pension. This creates a concentration of wealth/money into a relatively few organizations. I think money and wealth should be created more locally. Of course, this is very idealistic and simplistic. However, what did people think was going to happen when the common wisdom is to put your money into an index and then shut up? It…

There are still active investors who decide which investments are good. The passive investors follow, for better or worse.

I am sure they invest well, but they don't invest locally. So most of the economy is choked by the few.
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