| ▲ | usrnm 3 days ago |
| I feel like the money itself makes less and less sense these days. It's just numbers that are becoming increasingly detached from the real world |
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| ▲ | pembrook 3 days ago | parent | next [-] |
| Before you pat yourself on the back for being so smart and grounded... Remember, every technology you use today followed this pattern, with winners emerging that absolutely did go on to be extremely profitable for decades. Most of us remember the .com era. But in the early 1900s there was literally hundreds of automotive startups (actual car companies, and tens of thousands of supplier startups) in the metro-detroit area: https://en.wikipedia.org/wiki/List_of_defunct_automobile_man... Some of these went on to be absolutely fantastic investments, most didn't. All VCs and people who invest in venture know this pattern. Everybody involved knows exactly the high risk level of the bets they are making. This is not "dumb" money detached from reality, and the pension funds with a 3% allocation to venture are going to be just fine if all these companies implode, this is just uncorrelated diversification for them. The point of these VC funds is to lose most of the time and win big very rarely. There will be crashes, and more bubbles in the future. Humans will human. Everything is fine. |
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| ▲ | fullshark 3 days ago | parent | next [-] | | And they also realize they don't need to be fantastic investments to pay off, they just need to IPO/be acquired at a higher share price. | | |
| ▲ | delfinom 3 days ago | parent [-] | | RIP our 401ks that will end up being the bagholders when its dumped on the market. | | |
| ▲ | pembrook 3 days ago | parent [-] | | Your 401k is going to be fine, nobody goes public anymore until they're a big, dumb, boring, profitable company and all of the risk+returns have been rung out. Too many normies betting their life savings without understanding this risk in prior bubbles, so we regulated away the ability for non-institutional investors to take venture risk at all. | | |
| ▲ | otterley 3 days ago | parent [-] | | > we regulated away the ability for non-institutional investors to take venture risk at all. Some institutions try to achieve this by launching their own cryptocurrencies, but by and large, the market isn't biting. |
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| ▲ | utyop22 2 days ago | parent | prev | next [-] | | "The point of these VC funds is to lose most of the time and win big very rarely." Sure, but in my view, I think we are on the downtrend now and this line of thinking has been taken way too far. | |
| ▲ | 113 3 days ago | parent | prev | next [-] | | Did you respond to the wrong comment? | |
| ▲ | jstoppa 2 days ago | parent | prev [-] | | I agree, just another cycle |
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| ▲ | fullshark 3 days ago | parent | prev | next [-] |
| The real world sees no other opportunities for outsized returns. Too much money chasing too little opportunity. |
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| ▲ | prasadjoglekar 3 days ago | parent | next [-] | | Yup! Public markets are at all time highs. Other hard assets are also at all time highs. This sort of speculative investment only makes sense when nothing else is attractive. And it's cash from asset managers. Its not 10Bn worth of compute time from Microsoft or Google. | | |
| ▲ | simianwords 2 days ago | parent [-] | | Its a strange way to view things.. the investors found a place to invest money from which they can make profits and they did it. Much like any other investment. What do you think makes this more speculative than any other investment? |
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| ▲ | marcosdumay 3 days ago | parent | prev [-] | | That's what wealth inequality does. | | |
| ▲ | wagwang 3 days ago | parent | next [-] | | No that's what low interest rates does | | |
| ▲ | JimmyBuckets 3 days ago | parent | next [-] | | This comment seems like a rebuttal which is confusing to me because they are deeply related. | | |
| ▲ | wagwang 3 days ago | parent [-] | | Maybe, but interest rates among other bad banking practices is how we got here in the first place. |
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| ▲ | Printerisreal 3 days ago | parent | prev [-] | | No that's what PRINTING fiat money does. Low or high interest rates, they print $trillions | | |
| ▲ | wagwang 3 days ago | parent | next [-] | | Every dollar that's printed gets multiplied based on the interest rate | |
| ▲ | arcticbull 3 days ago | parent | prev | next [-] | | Who's "they"? | | |
| ▲ | Printerisreal 3 days ago | parent [-] | | Governments, CBs and investment banks. "They" do it and work together to print more. | | |
| ▲ | arcticbull 3 days ago | parent [-] | | In a centrally banked economy, retail and commercial banks create money when you take out loans. The government doesn't create money except during QE which only happened twice in the US, 2009-2014 and 2020-2021. That's why I was curious what you meant by "they." The Fed has been actively destroying money for the last 4 years. | | |
| ▲ | marcosdumay 2 days ago | parent | next [-] | | The government creates money every time it spends more than it taxes. AFAIK, the US has been doing that nonstop since the turn of the century. That new money is different from the new money the central bank creates to push interest rates down. That later one the US has been destroying. But both do many of the same things (but not all). | | |
| ▲ | arcticbull 2 days ago | parent [-] | | No, it doesn't. Deficit spending does not create new money. Deficit spending borrows existing money from people in the economy who already have it, and gives it out in exchange for a share of future revenues. The Fed does not participate in Treasury primary auctions and does not monetize the debt as a means of funding government operations. Think about it this way: if money were just created to fund the deficit why would we have a debt? That's double-counting. You can invalidate your hypothesis very easily: the M2 money supply is about half the size of the debt. It's not possible to square that circle unless deficit spending was re-pledging existing money. |
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| ▲ | wagwang 2 days ago | parent | prev | next [-] | | The amount of money banks create is determined by the appetite for credit which is determined by the interest rate. The fed has not been actively destroying money, they are at most slowing the rate of the increase of money. | | |
| ▲ | arcticbull 2 days ago | parent [-] | | They influence creation of money by adjusting the short-term interest rate which influences the demand for borrowing at commercial and retail banks. It's not that direct or straight-forward though, because they only have control over the short end of the yield curve not the long end. The long end of the yield curve has interest rates defined mostly by inflation expectations. If they dropped rates to 0% overnight it probably wouldn't move the 30Y yield all that much -- it might even raise it because of the expectation lower short-end yields would raise inflation. The Fed doesn't have nearly as much control as folks think. The Fed directly created money during QE and they are directly destroying it during QT. There's a net add, but that's mostly because the economy is growing, which creates new demand for money as expressed by demand for debt. The money supply staying fixed or shrinking is a non-goal anyways. It's irrelevant. What matters is inflation as measured from the change in actual prices. | | |
| ▲ | Printerisreal 2 days ago | parent [-] | | they lie about real inflation, everywhere | | |
| ▲ | arcticbull 2 days ago | parent [-] | | They really don't. You can run the numbers yourself. All the prices that it's computed from are public, the methodology is public and it's dead easy to backtest. Dead. Easy. (1 + (Inflation / 100)) ^ (Years). Inflation would be the dumbest possible thing to lie about because it's so damn easy to check. The conversation always goes like this. You: "The government is lying about inflation!" Me: "Ok, what rate do you think it's actually been?" You: "10%!" Me: "So you're telling me inflation over the last 30 years was 1700%? So prices are now 17X higher than in 1995? You sure?" Then we look up historical prices like this. https://www.tasteofhome.com/collection/this-is-what-grocerie... In 1995 ground beef was $1.49/lb. Bread was $.89/loaf. Eggs were $0.92/doz. Milk was $2.50/gal. idk if you're shopping at Erewhon but where I shop ground beef isn't $25/lb, bread isn't $15/loaf, eggs, well, you got me there lol, and milk isn't $42.50/gal. Unless the conspiracy is far bigger than we think, or "they" are everywhere, whoever "they" are, I think it's safe to assume that inflation numbers have been pretty accurate. |
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| ▲ | Printerisreal 3 days ago | parent | prev [-] | | Now explain why government raise the debt limit? other than allowing printing to get fiat money? | | |
| ▲ | arcticbull 2 days ago | parent [-] | | Ah yeah, that's a common misconception. Deficit spending doesn't create new money. Deficit spending borrows existing money from the population and institutions in exchange for a promise of future government revenues. The Fed does not participate in treasury primary auctions and does not monetize the debt as a means of funding government operations. If you printed new money to pay for the government, you wouldn't have a debt. That's double-counting. Not to mention the debt is twice as large as the entire money supply so what you're suggesting isn't even physically possible. It would be inflationary to simply print new money to finance spending, which is exactly why it's not done. [edit] Also the debt limit is a stupid concept that's likely unconstitutional. Congress authorizes spending, meaningful debate over paying for it by adjusting the debt limit likely falls afoul of the 14th amendment's public debt clause. But yeah I mean the debt limit goes up because the government spends more money than it takes in, so it needs to borrow more each year. |
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| ▲ | 3 days ago | parent | prev [-] | | [deleted] |
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| ▲ | triceratops 3 days ago | parent | prev [-] | | +100 |
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| ▲ | ericmcer 3 days ago | parent | prev | next [-] |
| Maybe this is a roundabout weird benefit to income inequality... Like the banks and private equity have so much cash burning that they start taking increasingly risky moonshots that result in actual innovative projects. Normally projects like this would require the government to spearhead, but now there is so much cash floating around they can just throw 13B at a totally unprofitable high risk company. |
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| ▲ | yieldcrv 3 days ago | parent | prev | next [-] |
| So what should be exchanged for space inside a data center, what should be exchanged for the GPUs that they and everyone wants, what should be exchanged by the people that want to rent the GPUs before someone else All of whom have a real world standardized thing to exchange for this already Why do you think this discussion even needs to include the people who don’t have that standardized thing to exchange? If thats what you think |
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| ▲ | waynenilsen 3 days ago | parent | prev | next [-] |
| comparisons with internet age very much resonate - dark compute will be as dark fiber was |
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| ▲ | yabones 3 days ago | parent | next [-] | | You can take decades old fibre, stick some new transceivers on the ends, and have it run at the very latest speeds (unless it's cheap, damaged, etc) without having to pull it out and reinstall it. H100s will not age this well. It's not like owning old railroad tracks, it's like owning a fleet of 1992 Ford Taurus's. They'll be quickly obsolete and uneconomical in just a few years as semiconductor manufacturing continues to improve. | |
| ▲ | anthem2025 3 days ago | parent | prev | next [-] | | I doubt it. Some will be used a lot will be written off and tossed away. | |
| ▲ | sgnelson 3 days ago | parent | prev [-] | | For me that brings up two questions: 1) Will I (and others) be able to get a H100 (or similar) when the bubble pops, and would that lead to new innovations from the GPU poor? 2) Will China take the lead in AI as they are less "capitalistic" with the demands for outsized returns on their investment compared to US companies, and they may be more willing to continue to sink money into AI despite possible market returns? | | |
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| ▲ | Hamuko 3 days ago | parent | prev | next [-] |
| So, a bubble? |
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| ▲ | ACCount37 3 days ago | parent | prev | next [-] |
| If I had a dime for every time I see this kind of hot take, I'd be able to buy an H200 with that. A man looks at economics. Understands nothing. Thinks it must be all fake and made up. He must be so smart for seeing it through! |
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| ▲ | IshKebab 3 days ago | parent | next [-] | | It is all fake and made up, and the numbers are detached from the real world, but it's not like the market doesn't know that. Btw there's a decentish board game called Modern Art based around the pricing of art with no intrinsic value. | | |
| ▲ | simianwords 2 days ago | parent | next [-] | | >It is all fake and made up, and the numbers are detached from the real world, but it's not like the market doesn't know that. How? The market is the one that made the decision to invest. They are not playing musical chairs. | |
| ▲ | xpe 3 days ago | parent | prev [-] | | Perhaps there are salient differences between art on a wall and a company. | | |
| ▲ | Workaccount2 3 days ago | parent [-] | | At heart, not really. The whole point of all of this is to motivate humans to get off their butt and reduce entropy. | | |
| ▲ | xpe 2 days ago | parent | next [-] | | A painting on a wall is merely an inanimate object. A company has agency; it seeks to add economic value to itself over time including changing people’s perceptions. I don’t see how your comments have any bearing to the point I was making. What am I missing? | | |
| ▲ | Workaccount2 2 days ago | parent [-] | | I'm not the one who decided that a painting appreciates with time and trends. But they do it pretty reliably and people keep paying the dollars that we all use for everything else for them. It's just another generally appreciating asset regardless if it's value comes from looks or tax structuring utility. | | |
| ▲ | xpe a day ago | parent [-] | | >>>> different commenter above: It is all fake and made up, and the numbers are detached from the real world, but it's not like the market doesn't know that. >>> me: Perhaps there are salient differences between art on a wall and a company. >> you: At heart, not really. The whole point of all of this is to motivate humans to get off their butt and reduce entropy. > me: A painting on a wall is merely an inanimate object. / A company has agency; it seeks to add economic value to itself over time including changing people’s perceptions. The Horror! Just look at the disjointed conversational history above. It seems like some sort of drunken history episode where people aren’t paying attention to each other. Should I assume you are trying to understand what I’m saying? It is becoming less plausible with every comment. (I’m referring to the “be charitable” part of HN guidelines.) Additionally, there is another anti-pattern at work here: this seems like a pretty inane definitional argument. You’re claiming there’s no difference between art on a wall and a corporation entity? By what definition? What is the utility of your definition; meaning, what can you do with your definition that provides differential predictive power? My claim: when it comes to valuation, an agent is sufficiently different from a non-agent (yes, even if it appreciates!) What is the criteria for “sufficiently different”? To explain: if you get more benefit out of a distinction than it costs you to make the distinction, it is a net benefit. In this case about valuing things, someone who makes a living building predictive valuation models is going to distinguish wall art from corporate entities because doing so is useful for prediction. Of course they have some things in common. This is irrelevant to the question of “is making this distinction worth it?” As long as predicting the difference between them is valuable paying attention to the distinction is valuable. This kind of talking past each other is one of many reasons “why we can’t have nice things” such as useful discussion. Shameful. If you propose some grand unified theory that says two things ultimately derive from the same thing, that’s fine, but if you’re going to use it for prediction you’ll have to explain how to apply it. |
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| ▲ | badpun 2 days ago | parent | prev [-] | | Art piece cannot do buybacks/dividends. |
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| ▲ | eatsyourtacos 3 days ago | parent | prev [-] | | Economics is entirely made up. It's a social science. | | |
| ▲ | ACCount37 3 days ago | parent [-] | | In case of economics, the gap between "social science" and "entirely made up" is ten miles long and filled with hellfire. The laws of economics have the kind of inevitability you expect from the laws of physics. Disrespect them at your own peril. | | |
| ▲ | luisfmh 2 days ago | parent | next [-] | | Hard disagree on this. The gap between the levels of statistical significance you get in economics vs physics is massive. They're not at the same levels of inevitability. The predictive power of the laws of physics vs the laws of economics is vastly different. | |
| ▲ | eatsyourtacos 14 hours ago | parent | prev [-] | | >The laws of economics have the kind of inevitability you expect from the laws of physics Absolutely not- that is ridiculous. Let's take "supply and demand" for example. Supply and demand only applies when you assume greed and capitalism. In a different social construct, the traditional supply & demand completely falls apart. But the problem is economics is presented as some sort of fact of nature. It just reinforces survival of the fittest instead of society that helps everyone. Increasing prices because of demand is not the law of the land- it's a greed of humans that you normalize and make acceptable. |
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| ▲ | xpe 3 days ago | parent | prev | next [-] |
| No disrespect to anyone in particular*, but I don’t care about one person’s armchair quarterback “feelings” about investment levels, bubbles, or <vague term that you won’t define>. Give me something I can learn from. * I’m an equal opportunity critic of comments that are indistinguishable from people yelling into the void with whatever pops into their head. So yes, I’m extremely critical of this very human tendency that isn’t helpful. |
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| ▲ | utyop22 2 days ago | parent [-] | | I agree to an extent. But this stuff is actually super hard to do. Humans tend not to like doing the hard stuff. |
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| ▲ | OhMeadhbh 3 days ago | parent | prev [-] |
| Money is impossible. Money is beautiful. Money is theft. [Voted down by the cash cabal! Arise! Knowledge workers of the world, you have nothing to lose but your SPARE CHANGE!] |
