Before I get to what I am going to call Leopold’s Folly, let’s talk about check-kiting, a classic scam that has been on my mind. Wikipedia has a nice summary.

I am not saying that the generative AI industry is literally check-kiting. If Masa wants to take out loans on his OpenAI shares in order to buy more OpenAI shares, he’s entitled to do that. And I don’t think it’s blatant fraud the way that check-kiting is, where people know from the outset that the promises to pay will never bear out.

But we certainly see circular elements that are reminiscent of check-kiting:

And it’s not clear that all the debts that are being issued can actually be paid off. They are all extraordinarily speculative. Maybe there will be trillions of dollars in profits at the end of the rainbow, but maybe not.

Still, we need a different analysis.