Derek Thompson

You told me 25 minutes ago or whatever that data center costs are like 70% GPUs, which means in effect that these REITs are basically just like

significantly in nvidia right like i mean these grandparents who like don't even know that they're like nvidia investors are like significant investors in nvidia which means as nvidia goes so do their investment portfolios i mean that also seems like a significant part of this which is that like you know you've got this enormous us economy 35 trillion dollars and it's like

a significant amount of its growth on a quarter-to-quarter basis, whether it's equities or GDP, like balances on the narrow read of like, how's Nvidia doing?

It really, it just seems like an enormous share of economic growth right now is like basically, how are we doing with chip sales?

So going further along this particular train of thought, what does a bubble look like to you?

What are the news headlines?

The economic commentator Noah Smith wrote a piece about what it would look like if a data center slowdown became a true financial crisis.

And he put it this way, and I would just love to hear you evaluate this particular logic.

He said, you know, number one, we've got this big story about how this time is different, that AI is going to be the technology to overtake all technologies.

Number two, we've got a large and increasing amount of debt.

being used to fund one single sector.

And that means that the loan's probability of default is highly correlated.

If one loan defaults, it means there's probably others that are gonna default as well.

We've got an opaque corner, as you've said, of the financial system with private credit that's grown a lot.

And finally, we have systemically important lenders, banks, and even insurance companies.

I believe life insurance companies in particular are significant LPs to some of these private credit firms you've talked about.

And they're enmeshed in this new sector that might see a drawback in the near future.

To what extent do you think that this represents the ingredients for an actual financial crisis?

what's the most likely way that you're wrong or that we're wrong?

That like the case for the bubble has some error in it, right?