tsc and tsserver have different ideas of excessively deep types

TypeScript Version:

typescript-3.6.0-insiders.20190725

https://typescript.visualstudio.com/cf7ac146-d525-443c-b23c-0d58337efebc/_apis/build/builds/37759/artifacts?artifactName=tgz&fileId=2A7E3F3E93DD6F833D63A63F3A7A21707B3F57B08FCA5C93A8F1848556D8141F02&fileName=/typescript-3.6.0-insiders.20190725.tgz

Taken from,
https://github.com/microsoft/TypeScript/pull/32028#issuecomment-515234327

Search Terms:

max instantiation count, max instantiation depth, tsc, tsserver

Code

I've reduced the 40-subproject monorepo to just small parts of 2 subprojects.

Here is a snippet of the problem,

/**
 *
 * ```json
 * //tsconfig-base.json
 * "disableSourceOfProjectReferenceRedirect": true,
 * ```
 *
 * ```json
 * //package.json
 * "typescript": "https://typescript.visualstudio.com/cf7ac146-d525-443c-b23c-0d58337efebc/_apis/build/builds/37759/artifacts?artifactName=tgz&fileId=2A7E3F3E93DD6F833D63A63F3A7A21707B3F57B08FCA5C93A8F1848556D8141F02&fileName=/typescript-3.6.0-insiders.20190725.tgz"
 * ```
 *
 * -----
 *
 * VS Code: OK!
 * Type inference OK!
 *
 * -----
 *
 * `tsc` gives me,
 *
 * ```js
 * src/blah.ts:11:21 - error TS2589: Type instantiation is excessively deep and possibly infinite.
 *
 *  11 export const json = tm.deepMerge(
 *                         ~~~~~~~~~~~~~
 *  12     base.json,
 *     ~~~~~~~~~~~~~~
 * ...
 *  31     s.convertBlahType.toStr.BLAH
 *     ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
 *  32 );
 *     ~
 * ```
 */
export const json = tm.deepMerge(
  /*snip*/
);

const x = json("", "");
if (x.foo != undefined) {
    if (x.foo.bar != undefined) {
        //Correctly infers `string`
        //So, 14M type instantiations is okay with VS code
        x.foo.bar.baz
    }
}

Expected behavior:

If tsc gets the error,

TS2589: Type instantiation is excessively deep and possibly infinite.

Then tsserver should also get the error

Actual behavior:

tsc gets the error, but tsserver does not (or at least VS code infers the type correctly without errors)

Playground Link:

-None-

@sheetalkamat

The project involved contains code related to a company project.
So, I really do not want to upload it publicly, if possible.

I could mangle the variable names so that they're meaningless but if I can just email the parts of the project that are involved, that would be nice.

Repro steps:

1. npm install
2. npm run build
3. See TS2589: Type instantiation is excessively deep and possibly infinite.
4. Open VS code
5. Navigate to file tsc says contains errors
6. Notice no errors
7. Play with return type of function
8. Notice inference works correctly

Related Issues:

The merged PR that introduced the error,
https://github.com/microsoft/TypeScript/pull/32079#issuecomment-515334873

The build I am testing,
https://github.com/microsoft/TypeScript/pull/32028

Also relevant, https://github.com/microsoft/TypeScript/issues/29511
It seems like every few versions, there ends up being a difference between tsc and tsserver, regarding the max instantiation depth

Start with the supplied npm install/build and VS Code reproduction steps, then compare the diagnostics from tsc and tsserver. Read the behavior discussed in PR 32079 and related issue 29511; completion means both tools consistently report the excessively deep type error for the same project.