Henry Hazlitt long ago observed that economics is stalked by fallacy. He published Economics In One Lesson in 1946. The bet here is that if around today, he would begin his most important book the same way. Nvidia shows why.
Consider that the Santa Clara-based company nearly went under in the 1990s. As Ben Cohen wrote in the Wall Street Journal, Nvidia’s “first chip was a flop. Its next chip was doomed to fail.” He adds that founder Jensen Huang knew the failures amounted to “an existential moment for his nascent company.” This is notable simply because Nvidia nearly died in a stretch of what economists and pundits have long characterized as “easy money.” Supposedly the Fed can decree credit cheap just by fiddling with the Fed funds rate. We know this because economists and pundits have claimed more recently that from 2009 to 2022, credit was “costless.”
Evidently Huang and Nvidia didn’t the get the memo. Neither did Elon Musk as evidenced by the myriad times throughout the 1990s, early 2000s, and 2010s when his various entrepreneurial ventures were on the doorstep of bankruptcy. To this day, Nvidia keeps a sign warning “Our company is thirty days from going out of business” not because money is ever easy, but precisely because it’s always incredibly difficult to access.
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