If you look at the last 10 years you have to admit that the statement wouldn't be true. No tech company spent like they do now they rather opted for stock buybacks.
I think the comparison to stock buybacks is ludicrous.
Evidence?
Perhaps depends on what you mean with "ecosystem". Within the AI tech/hype, sure, there it's good. But for the economy as a whole? Is it that good? There are probably some benefits, but do they match the current valuations?
Most likely they don't, because hype cycles inherently overvaluate things for a while because they don't know what will stick. If things were not dramatically overvalued right now then investors would not be acting in their best interest.
Will it match a certain valuation within a certain time period? I guess I don’t really care, I’m not an investor.
[1] https://www.mckinsey.com/capabilities/operations/our-insight...
Did they park it in bonds over the past 10 years? I doubt it. Interest rates were ~0, VC funding was crazy, the money taps were open. They would have been less open without these buybacks.
It's not necessarily 1:1, it seems people are more willing to spend the cash on AI than they were on other things. But it's not 1:0 either.
I love the way I keep getting downvoted on HN whenever I say anything about a subject about which I know a lot more about than the average person here (usually investment and finance).
I also didn't say that the money disappear, I said the money may just end up getting parked in the modern day equivalent of dragon hoards. There's plenty of things to park idle money in hopes of returns.
I was just pointing out that the idea thaf it would just become investment in other parts of the economy is naive.
> I love the way I keep getting downvoted
I hadn't downvoted you, but I will do so now. I always downvote people that are butthurt about internet points.
You miss the point. What does the person who sold the assets in which the money is "parked" do with it? If they buy a bonds what does the seller of the bonds do with the money? Leave it in a bank account? The bank will lend the money to someone who will either spend the money (stimulating the economy) or reinvest it. They might buy another asset. If that asset is newly issued shares or bonds, the money will then go to a company planning to reinvest it. Anything else and it just pushes it another step to another person.
Eventually it goes back into the economy.
> I was just pointing out that the idea thaf it would just become investment in other parts of the economy is naive.
The naive assumption is that "parked" money somehow leaves the economy. its "parked" from the point of view of the person making the investment, but it has to go somewhere.
> I hadn't downvoted you, but I will do so now. I always downvote people that are butthurt about internet points.
How mature and charmingly expressed!
My point is that there is a lot of Dunning–Kruger in HN discussions of economics and finance.
I miss no point. I understand quite well that "parked money" still exusts. What you ignore is that value is sometimes "destroyed". Investiments that underperform or go in the red, loans that default, crashes in real estate, etc. if money is invested in stocks, and the stocks value go in freefall, the nominal amount of money that existed previously in the economy is the same, and everyone is still poorer because of it.
The massive AI hype is massively pumping a bull run in a very small sector of the economy (if this is a bubble is not something I can answer). A lot of money is moving around around a small subset of companies pumping revenues of one another in a circular fashion, which increases the value of those stocks (thus creating economic growth, real or otherwise). Without this mechanism, this value wouldn't have been created. It's anyone's guess how things would perform without it.
During a crash, the same amount of money that existed prior to the crash is still there. The crash still happens and the country can still go into recession.
> How mature and charmingly expressed!
Thank you. I, too, think I am mature and charming.
You also failed to understand that money put into an investment has to go somewhere pretty much immediately. If someone defaults on a loan they must have used the money, so someone else has it, so it is still not destroyed.
I explicitly did not talk about AI being a bubble.
You may understand of economics (at least you say so). But reading comprehension is not your forte.
That's the inherent nature of these voting based online platforms. They reward what the user base wants to hear over what is correct. This is especially apparent in matters with inherent nuance and uncertainty.
In your comment I’m replying to, the first paragraph contributes meaningfully to the discussion; the second sounds a bit like lashing out, which might be why people react negatively.
> a subject about which I know a lot more about than the average person here
True or not, expressing it like that is just arrogant.