Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

Has a competent economist modeled the circularity of these deals ? [ numerically or analytically ]

It seems a healthy economy has a lot of wide circularity .. money circulating is a good thing, a result of a functioning market, tracking the flow of real goods / services. But large corps circulating paper 'self-deals' or debt-swaps seems like a bad thing - a creative accounting practice designed to pump up their stock price/valuation.

How can we _quantify_ the difference ? I guess it would need to match the cash / debt flows against the movement of actual goods and services ??

Not an economist, feel free to weigh in, suggest links.

Recently: "Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom" (io-fund.com)

https://news.ycombinator.com/item?id=48873836

370 points| 18 days ago | 182 comments

If healthy and risky circular financing deals look similar at first, how can investors or regulators tell when a circular deal has crossed the line into something dangerous...especially when it's off the balance sheets?

I think the real question in all sorts of financial setups is really “is the dollar actually worth a dollar”. So when company A invests in company B which buys from company A the actual question is whether the valuation of the investment and the valuation of the purchase is correct or are they getting high on their own supply

Observing how the US stock market is behaving this week (up-down-up-down...), I feel like many investors don't appreciate the distinction between good and bad circularity.

> commodification of intelligence

Is HN really this fast!? Everybody already skipped the hard questions whether LLMs are intelligent? 'It' can already be commodified?

So how much time and effort it took from these companies? A couple of years and millions spent on PR? And LLMs are "intelligent" all of a sudden, is what everybody says nowadays?

Especially applicable for programmers: naming things is not only hard, it's also important, and can be very insidious. Remember, marketeers also name things. For example, naming the internet 'the cloud', some 15 years ago.

I can't stop thinking about a quote of one of my favorite authors (Theo Kars): "Progress can only be technical in nature, because knowledge is transferable and wisdom is not." [translated from Dutch]

Whether inference hardware will be a commodity remains to be seen. We had twenty years of most servers being x86-64. That's commodity compute. Inference hardware isn't a mature architecture yet. There will be progress and obsolescence.

Excellent piece, but it does hinge on the idea that what we’re building is actual AI (still hotly debated), if it can be successfully commoditized like utilities (very unlikely given compute continuously evolves and the hardware cycles of datacenters relative to power plants or water filtration systems), and if such a healthy cycle - should it develop at all - survives the multiple decades needed to effectively provide ROI.

Which is an awful lot of “ifs” to be hedging a bet on, especially at nation-state scales.