I think that makes a lot of assumptions about the size of data and what can be efficiently packed into prompts. Even if we're assuming all info in a prompt is equal while in context and that it compresses information into the prompts before it falls out of context, then you're going to run into the compounding effects pretty quickly.

You're right, you don't technically need infinite, but we are still talking about exponential growth and I don't think that effectively changes anything.