> Then there are not, by definition, "more projects chasing a shrinking supply of capital."

It can be true if it is a subset of “more projects”, if the decision mechanism works outside a market, or if that capital is accessible via mechanisms within the market which are not directly linked to borrowing rates, such as where the cost of capital was locked in years ago. Rates are not a panacea.

> This is supply-side inflation. You can still bring down inflation with rates by cooling demand. (Less free cash in the economy means less spending on AI means less demand for GPUs.) The downside is it costs you more output than in a balanced economy.

You said the same thing I said, just euphemistically. This is like saying you can rid your house of insects with a flamethrower.