All debt is money. Anybody can create money, the trick is getting other people to accept it.

Nvidia is vendor financing its output.

An ai company order $100m of GPUs. Nvidia delivers and holds onto that debt as an asset - like a bank loan.

The production company uses AI to create better plant and purchases $100m of AI tokens to do so. The ai company hold that debt like a bank loan

Nvidia requests $100m of production based on its $100m of orders. The production company holds that debt like a bank loan.

You now have a monetary loop. Take a single $10 bank deposit and Nvidia pays the production company, who pays the ai company who pays Nvidia. Run that round the circle a few million times and everybody has been paid.

Rinse and repeat.

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 actually directly like this, a lot of other factors are involved, maybe the money is spent, maybe no one wants to borrow it, etc etc -- so it's more complicated but that's I think what they mean

> Only the fed can actually order more money to be "created"

No. Most money in modern economies is created by private parties [1].

[1] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

Every form of lending that is specified via currency increases the supply.

If I give you GPUs worth $1bn, but take 100m payments for 11 years, then during that time you can use your other mony to buy other things that arent GPUs

If we stop after the 11 years and dont make new loans, the supply has shrunk back

I think at the top level between Govt and Industry and understanding has been reached that AI industry will be backstopped

If they’re effectively guaranteeing $500B in loans that adds close to $500B to M1, basically, that banks were not otherwise providing or loaning - at least that was my calculation.

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.

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.

They aren’t; the parent comment is incorrect. It’s safer to say Nvidia is encouraging the money that already exists to be deployed on AI buildouts.

But everyone is now chasing the same opportunity (AI and its dependencies like hardware and power) that will drive prices higher in those sectors until supply responds (or demand disappears).