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Nvidia is the central bank of AI

economist.com

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Re: Nvidia is the central bank of AI

#91

Post by dismalaf »

thrownawaysz wrote: post #13

I wonder when they will give up on the gaming market because that could take down several publishers and developers. I really don't think it's an if question but a when because it almost feels like an afterthought at this point (they removed the standalone gaming revenue report from the financial reports this summer). Also I don't think AMD and Intel is capable "to step in" to replace them.

> Also I don't think AMD and Intel is capable "to step in" to replace them

AMD has powered 2 generations each of Sony and Xbox consoles, Steam deck and shops a ton of GPUs especially if you count APUs. And then Intel literally ship more GPUs than Nvidia and AMD combined.

The gaming market doesn't need Nvidia. Especially as AAA is cratering.

Re: Nvidia is the central bank of AI

#92

Post by toenail »

cyberpunk wrote: post #83
manlymuppet wrote: post #74

Earlier quoted context omitted.

Maybe a dumb question but how is NVIDIA increasing the total supply of money? Only the fed can actually order more money to be "created". Private companies can only work within the existing supply, that is, their reserves, no?

NV gives out a $100 to Party A, who puts it in their bank. Bank takes $90 of that deposit (assuming 10% fractional reserve rule, no idea what the actual number is), and loans it out to party B, who pays it into either the same or another bank. Same rules apply -- except now it's down to $81 being loaned out, and so on and so forth, until that 100$ generated $1000 in total bank deposits. edit: of course, it's never ac…

0%. Zero percent is the actual reserve rule. https://www.stlouisfed.org/bank-supervision/reserve-administ...

Re: Nvidia is the central bank of AI

#93

Post by [deleted] »

arcanemachiner wrote: post #86
manlymuppet wrote: post #74

Earlier quoted context omitted.

Maybe a dumb question but how is NVIDIA increasing the total supply of money? Only the fed can actually order more money to be "created". Private companies can only work within the existing supply, that is, their reserves, no?

Banks create money when issuing a loan. This is how fractional reserve banking works. They lend money they don't have (most of). This is institutionalized fraud, and it's been standard operating procedure for centuries.

[deleted]

Re: Nvidia is the central bank of AI

#94

Post by estearum »

esikich wrote: post #89
idontwantthis wrote: post #84

Earlier quoted context omitted.

Private banks increase money supply by lending. If 10 people deposit $1000 in a bank, it can loan $9000 to an 11th person. Now the economy has $19000 total.

The $9000 has to be paid back, and then some. I sure hope you aren't an accountant.

Eventually

Which is, you know, the entire risk that people are worried about.

Re: Nvidia is the central bank of AI

#95

Post by master_crab »

JumpCrisscross wrote: post #49

> worth around $5.4trn Note that the Fed has a $6.7tn balance sheet [1]. (This is a silly comparison. But still fun.) The real comparison: Nvidia's $500+ billion of investments and commitments [2] is substantially more than any easing the Fed has done in the same time [3]. Monetarily, Nvidia is creating a lot of money in our economy. The good news: I have seen no evidence Nvidia has borrowed against its stock or othe…

“as long as it’s cash flow continues” is doing a lot of optimistic heavy lifting. The whole premise of the circular financing worry is that Nvidia sits in the middle of all the guarantees made to companies like OpenAI. If any of those companies become insolvent, Nvidia is on the hook for it.

Also Nvidia isn’t really creating money. The 500B number is third party capital that already exists (BX, Apollo, etc).

Re: Nvidia is the central bank of AI

#96

Post by MachineMan »

thrownawaysz wrote: post #13

I wonder when they will give up on the gaming market because that could take down several publishers and developers. I really don't think it's an if question but a when because it almost feels like an afterthought at this point (they removed the standalone gaming revenue report from the financial reports this summer). Also I don't think AMD and Intel is capable "to step in" to replace them.

A Chinese company like CXMT will surely fill that unaddressed market the way CXMT is doing for memory. It would be rather unwise for nvidia to leave the door to the market open. AMD is positioned well to grow right now due to their non-Apple sillicon unified ram hardware coming soon.

Re: Nvidia is the central bank of AI

#97

Post by mastax »

esikich wrote: post #89
idontwantthis wrote: post #84

Earlier quoted context omitted.

Private banks increase money supply by lending. If 10 people deposit $1000 in a bank, it can loan $9000 to an 11th person. Now the economy has $19000 total.

The $9000 has to be paid back, and then some. I sure hope you aren't an accountant.

But for the duration, there is more money. This isn’t some crank theory, it’s orthodox economics: https://en.wikipedia.org/wiki/Fractional-reserve_banking

Re: Nvidia is the central bank of AI

#98

Post by manlymuppet »

cyberpunk wrote: post #83
manlymuppet wrote: post #74

Earlier quoted context omitted.

Maybe a dumb question but how is NVIDIA increasing the total supply of money? Only the fed can actually order more money to be "created". Private companies can only work within the existing supply, that is, their reserves, no?

NV gives out a $100 to Party A, who puts it in their bank. Bank takes $90 of that deposit (assuming 10% fractional reserve rule, no idea what the actual number is), and loans it out to party B, who pays it into either the same or another bank. Same rules apply -- except now it's down to $81 being loaned out, and so on and so forth, until that 100$ generated $1000 in total bank deposits. edit: of course, it's never ac…

That was my intuition at first too, but the original comment specified that they weren't borrowing all this money they're spending. The article also says how this is part of NVIDIA's strategy to enable demand, not create it, so supposedly these investments into their customers are actually going straight to paying for things.

Even if this money eventually gets loaned out eventually by one of NVIDIA's customers putting it into a bank, it isn't NVIDIA inflating the money supply, it's the borrowers, no? Or is this an ineffective way to look at things?

Re: Nvidia is the central bank of AI

#99

Post by einpoklum »

sailfast wrote: post #57
JumpCrisscross wrote: post #49

> worth around $5.4trn Note that the Fed has a $6.7tn balance sheet [1]. (This is a silly comparison. But still fun.) The real comparison: Nvidia's $500+ billion of investments and commitments [2] is substantially more than any easing the Fed has done in the same time [3]. Monetarily, Nvidia is creating a lot of money in our economy. The good news: I have seen no evidence Nvidia has borrowed against its stock or othe…

It would also follow that by increasing the money supply significantly they’re also contributing to inflation a great deal correct? (Given the rest of the economy is not growing at near the same rate as the AI industry)

Regardless of NVIDIA and LLM/AI, the claim that inflation is caused directly, or without-fail, by an increase in money supply - is not well founded. A significant money supply increase may very well have a tiny or possibly even negative price-increasing impact - depending on how money is supplied, to which elements and under what conditions.

Re: Nvidia is the central bank of AI

#100

Post by theoreticalmal »

esikich wrote: post #89
idontwantthis wrote: post #84

Earlier quoted context omitted.

Private banks increase money supply by lending. If 10 people deposit $1000 in a bank, it can loan $9000 to an 11th person. Now the economy has $19000 total.

The $9000 has to be paid back, and then some. I sure hope you aren't an accountant.

I learned about this concept in college macroeconomics. I asked this exact question and the TA said “yeah I guess repaying debt is like destroying money” as if they had never thought of that before. The idea of lending money increasing the money supply is definitionally true.
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