8 ms·

I am hoping it is just the usual ponzi thing.

by nejsjsjsbsb 2y ago

ajmurmann 2y ago
How would this be a Ponzi scheme? Who are the leaf nodes ending up holding the bag?
- sanderjd 2y ago
  Investors, mostly private - eg. SoftBank and all the other deep pockets funneling money into this - but also public, because lots of people are invested in Nvidia, Microsoft, and Google, who will be directly affected if the bubble bursts, and just everyone invested in the markets generally, as this bubble bursting would already probably be more broadly damaging than even the dot com bust was. Personally, I do expect a big correction at some point, even if it never reaches the point of bubble bursting. But I have no idea when I expect it to happen, so this isn't, like, an investable thesis.
  - ajmurmann 2y ago
    So unlike with a regular Ponzi scheme most of the money just is wasted?
    - nejsjsjsbsb 2y ago
      Well Madoff funnelled it into lifestyle. Technically you are correct. A ponzi is a single entity paying returns from new marks. It is a straight con. But some systems can be ponzi-like in that they require more and more investment and people get rich by selling into that. Bitcoin is an example.
    - sanderjd 2y ago
      Not sure what you mean by "wasted"? Like a regular Ponzi scheme, there are many opportunities for the people at the top to extract value out into cash, while people who "got in" on the scheme later are left holding the bag when the bubble bursts.
      - ajmurmann 2y ago
        Yes, usually people at the top extract the cash. Like Bernie Madoff just spent the money for his enjoyment. In this case the money goes to people building the data centers, providing resources and the engineers at OpenAI who are actually working for the money.
        sanderjd 2y ago
        A lot of it does - and that's great! - but a lot of it accrues to the owners of the businesses involved. If this is a bubble and it bursts in a few years, a lot of investors in specific companies, and in the market broadly, will lose a lot of money, but Sam Altman and Jensen Huang will remain very wealthy. I'm a capitalist and I think there are good reasons for wealth to accrue to those who take risks and drive toward technological progress. But it just also is the case that they are incentivized to hype their companies, even if it risks getting out over their skis and leads to a bubble which eventually bursts. There are just have lots of ways to extract wealth prior to a bubble bursting, so the downsides of unwarranted hype are not as acute as they might otherwise be.
- nejsjsjsbsb 2y ago
  https://www.aboutamazon.com/news/aws/amazon-invests-additional-4-billion-anthropic-ai https://www.aboutamazon.com/news/aws/amazon-invests-addition... Not this specificay but this kinda thing. If I am getting billions like this, I wanna keep this gravy going. And it comes from shareholders ultimately.
  - ajmurmann 2y ago
    It's just being spent though, no? Sounds more like a potential waste of money than a Ponzi scheme.

I am hoping it is just the usual ponzi thing.

ajmurmann 2y ago

How would this be a Ponzi scheme? Who are the leaf nodes ending up holding the bag?

sanderjd 2y ago
Investors, mostly private - eg. SoftBank and all the other deep pockets funneling money into this - but also public, because lots of people are invested in Nvidia, Microsoft, and Google, who will be directly affected if the bubble bursts, and just everyone invested in the markets generally, as this bubble bursting would already probably be more broadly damaging than even the dot com bust was. Personally, I do expect a big correction at some point, even if it never reaches the point of bubble bursting. But I have no idea when I expect it to happen, so this isn't, like, an investable thesis.
- ajmurmann 2y ago
  So unlike with a regular Ponzi scheme most of the money just is wasted?
  - nejsjsjsbsb 2y ago
    Well Madoff funnelled it into lifestyle. Technically you are correct. A ponzi is a single entity paying returns from new marks. It is a straight con. But some systems can be ponzi-like in that they require more and more investment and people get rich by selling into that. Bitcoin is an example.
  - sanderjd 2y ago
    Not sure what you mean by "wasted"? Like a regular Ponzi scheme, there are many opportunities for the people at the top to extract value out into cash, while people who "got in" on the scheme later are left holding the bag when the bubble bursts.
    - ajmurmann 2y ago
      Yes, usually people at the top extract the cash. Like Bernie Madoff just spent the money for his enjoyment. In this case the money goes to people building the data centers, providing resources and the engineers at OpenAI who are actually working for the money.
      - sanderjd 2y ago
        A lot of it does - and that's great! - but a lot of it accrues to the owners of the businesses involved. If this is a bubble and it bursts in a few years, a lot of investors in specific companies, and in the market broadly, will lose a lot of money, but Sam Altman and Jensen Huang will remain very wealthy. I'm a capitalist and I think there are good reasons for wealth to accrue to those who take risks and drive toward technological progress. But it just also is the case that they are incentivized to hype their companies, even if it risks getting out over their skis and leads to a bubble which eventually bursts. There are just have lots of ways to extract wealth prior to a bubble bursting, so the downsides of unwarranted hype are not as acute as they might otherwise be.
nejsjsjsbsb 2y ago
https://www.aboutamazon.com/news/aws/amazon-invests-additional-4-billion-anthropic-ai https://www.aboutamazon.com/news/aws/amazon-invests-addition... Not this specificay but this kinda thing. If I am getting billions like this, I wanna keep this gravy going. And it comes from shareholders ultimately.
- ajmurmann 2y ago
  It's just being spent though, no? Sounds more like a potential waste of money than a Ponzi scheme.