Comment by spwa4

This is not true because of how money works. Take mortgages. You might think that if the bank borrows you $100 to buy a house, it is now dependent on you paying back $100. In fact the reverse is true. Fractional reserve banking, you can find plenty of explanations that this "creates" money, that the banks can use or pay out to investors.

The wealth of a small set of banks is essentially the total money that's lent out. The wealth of a set of banks PLUS the government literally is the total money lent out. In other words: if houses start being owned "naked" (meaning no mortgage), either through bankruptcy or just paying off the loan, that's when banks

So let's say you have a circular loan. Nvidia -> MS -> OpenAI -> Nvidia. You have just created money (since it won't ever be paid back), and what you're dependent on is the valuation of the companies in the chain going up always, there is some leeway of course but it can't really drop.

If the money keeps circulating, the money "rotating" effectively becomes money these companies can spend (whether on stock buybacks or extra chips or management raises or ...) You hopefully also see that you or I, or anyone external cannot cause this situation to collapse, only the companies in the chain can (but have extreme incentives not to). The system collapses, of course, if one of these companies goes bankrupt, but until then there's nothing that can stop it.

And because of this it will make those companies "Too big to fail".