alt Hacker NewsIt 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)
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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.
well, M2 money supply is increasing with or without AI industry
Key difference is that these loans, which do increase the money supply and create inflation, are on average productive and profitable and thus deflationary. Quantitative easing is just printing money and often goes towards repaying bad debts, which are unproductive and thus not deflationary, so the inflation (increase in money supply) does not outweigh the deflation (creating of goods)
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?