How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

I honestly don’t get it. People love being swindled? Or people have enough cash to throw into the swindling machine even for no gain? Must be nice.

You can do a lot of money in swindles and bubbles if you time your exit well. There is a fair bit of opportunistic investors who did well in the NFT craze, who speculated knowing fully well that NFT is a craze that will go to zero.

The Greater Fool theory of investing strikes again.

these deals are made as part of a market so it's more like musical chairs where every time you change a chair you get a ton of money but you don't want to be the one that's stuck without a chair at the end

They've all realized the guy without the chair can be the taxpayer.

everything will eventually go to zero. we look at some of these things and laugh because we're pretty sure they're going to go to zero within weeks or months vs years. but by the end of all of our lifetimes, most the companies on the stock market will be replaced. the few that won't are probably investment banks like goldman sachs

Modern finance is all about debt.

Central banks don't print money[1] but investment banks do. Think about it like this: Someone deposits $100. The bank pays interest, to make money on to pay that interest, ~$90 is loaned out to someone.

Now, I still have a bank slip that says $100 in the account, and the bank has given $90 of that to someone else. We now have $190 in the economy! The catch is, that money needs to be paid back, so when people need to call in that cash, suddenly the economy only has $10, because the loan needed to be paid back, causing a cash vacuum.

But that paying back is also where the profit is, because you sell off the loan book, and you can get all your money back, including future interest. So you have lent out $90, sold the right to collect the repayments to someone else as a bond, so you now have $120, a profit of $30

That $30 comes pretty much from nowhere. (there are caveats....)

Now we have my bank account, after say a year with $104 in it, the bank has $26 pure profit AND someone has a bond "worth" $90 which pays $8 a year. but guess what, that bond is also a store of value. So even though its debt, it acts as money/value/whatever.

Now, the numbers are made up, so are the percentages. but the broad thrust is there.

[1] they do