> 5 billion doesn't look like much when OpenAI just raised $110b though.
Just about all of the AI providers "raises" are a fraction of the reported "raise", like this one.
They didn't "raise" $100b. They got commitments for $35b, with said commitments being dependent on meeting certain criteria.
Every "raise of $FOO" I've seen in the past year or two has not resulted in them getting their hands on $FOO in cash to spend.
You might be surprised to learn that there isn’t even $100b of cash [1]. Some sort of commitment structure necessarily substitutes.
[1]: https://fred.stlouisfed.org/series/USDIVCA
I can hardly believe that this is legal. They’re basically committing money that doesn’t exist just yet.
> I can hardly believe that this is legal. They’re basically committing money that doesn’t exist just yet.
What do you mean "just yet" :-)
I don't really know how likely it is that the money being committed will actually exist when the time comes (Softbank's commitment didn't exist, they had to sell off assets and rope in other investors to meet their commitments).
Maybe it is very likely to exist, but, really, who knows?
IOW, your statement would be equally true by ending the sentence at the word "exist".
would the correct read of this situation that they’re betting on the AI bubble popping?
> would the correct read of this situation that they’re betting on the AI bubble popping?
I really cannot tell. To be frank, I seriously doubt that they can tell either.
Vault cash are actual bills in vaults. It doesn't even include the bills in your wallet or under your mattress.
It's small because few people go to the bank to withdraw a suitcase of $100 bills, it's a weird time series to pull up because it's not really indicative of anything outside of narrow interests for regulators and the mint - it's probably some conspiracy theory trope from crypto bros or something.
Most money exists purely in electronic form these days.
Monetary base [0] which includes the digital money banks have on deposit at the Fed, is over $5 trillion, and even that is tiny compared to M1 [1] which includes the kinds of things backing your money market account, which is around $19T.
When money is invested, they're going to wire it, not pull up with wheelbarrows full of bills.
0. https://fred.stlouisfed.org/series/BOGMBASE 1. https://fred.stlouisfed.org/series/M1SL
GP is wrong though, vault cash is the incorrect time series for that.
GP should have used Monetary Base if they wanted to consider purely electronic cash (that is not a result of any fractional reserve stuff at all), which is over $5T disproving their point.
> When money is invested, they're going to wire it, not pull up with wheelbarrows full of bills.
I think GP was making the point that the "money" doesn't exist even in electronic form.
That's what I was referring to. They're committing money they don't have in any monetary form at all. They're just promising they'll have it when it comes due. This is kind of like MLM.