* An increase in hardware for an AI wouldn't require an increase in theoretical capacity of hardware. It would just require more stuff to be put on the machine running the AI. Even if the AI was running on the world's largest supercomputer, the amount of RAM, processors, etc on the machine could still be upped substantially with the resources available.
* What a hypothetical general AI would be emulating is not simply more machines. It would, theoretically, be able to quickly emulate many people working with many dumb machines over a long period of time.
The only thing your argument proves is current machines can't improve themselves - which I think everyone agrees with.
* An increase in hardware for an AI wouldn't require an increase in theoretical capacity of hardware. It would just require more stuff to be put on the machine running the AI. Even if the AI was running on the world's largest supercomputer, the amount of RAM, processors, etc on the machine could still be upped substantially with the resources available.
* What a hypothetical general AI would be emulating is not simply more machines. It would, theoretically, be able to quickly emulate many people working with many dumb machines over a long period of time.
The only thing your argument proves is current machines can't improve themselves - which I think everyone agrees with.