Rubber Meets The Road Economics: Exploring the forces shaping our economy

Investor Hunter Craig and University of Virginia economist Professor Edwin Burton break down this week's global bond sell-off, what the Fed is likely to do with rates next week, and why Professor Burton says the national debt could consume 80% of federal tax revenue within a decade. Long Description Recorded September 10, 2026 — just days before the Federal Reserve's next rate decision — this episode finds host Hunter Craig and University of Virginia economist Professor Edwin Burton digging into a global bond sell-off that's pushed the 10-year Treasury yield to a three-year high of 4.92%. Professor Burton lays out why he expects the Fed to raise its target range from 3.50%–3.75% to 3.75%–4.00%, and why he believes Treasury Secretary Bessent's recent comments about intervening in the long bond actually spooked the market rather than reassured it. From there, the conversation turns to money supply and inflation. Professor Burton argues that holding rates below the market's preferred level requires the Fed to expand the money supply — which he ties directly to the inflation the country has experienced since 2020–21, when M2 grew from $14.5 trillion to $22 trillion in just 16 months. The two also cover the national debt's trajectory toward $45–50 trillion over the next several years, the rising share of tax revenue that will go toward interest payments, and the looming funding shortfall in Social Security and Medicare. That leads into a candid discussion of healthcare spending — including end-of-life care — as a key driver of the federal budget, and a broader point about how well-intentioned policies (Professor Burton's example: the Americans with Disabilities Act) can end up serving very different people than originally intended. Finally, Professor Burton offers a plain-English explainer of the repo and reverse repo markets, traces their role in the 2008 collapses of Bear Stearns and Lehman Brothers (and Drexel Burnham Lambert's in 1988), and makes the case for a 0% inflation target in place of the Fed's current 2% target. Please note:  This podcast is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. Views expressed are those of the hosts and guests, not recommendations to buy, sell, or hold any security. Consult a licensed financial advisor before making investment decisions.

We're re-sharing a conversation recorded the day after the July 30th Fed meeting, between Mark Loehr, CEO of Open Exchange, and Professor Ed Burton — Mark's Econ 101 professor turned friend of 45+ years. Two people who go deep fast. The thesis: for the first time in recent memory, the Fed set its rate below where the market wanted it. To defend that rate, Burton argues, the Fed now has to print its way out — and money supply is the inflation story almost no one is telling. Burton and Loehr think July 30th was a genuine inflection point, and they wanted to document why the day after it happened. What they get into: Who really sets interest rates — the Fed or the market? Why Burton has watched money supply since 2020, when almost no one else was calling for inflation The two principles that explain most of this: supply and demand for money, and no-arbitrage The repo market — the largest securities market in the world, and the one that actually matters Why the money supply grew 3% in 13 weeks (roughly 13% annualized) while the rest of the economy grew a third of a percent What 20% money-supply growth in 2026 could do to inflation and long rates The one thing that could turn it all around: a slowdown in hyperscaler capital spending A short history of the Fed — from Andrew Jackson to JP Morgan to 2008 — and what it was actually created to do Plus: how Burton and his UVA students actually use AI Chapters: (00:00) Why we're re-sharing this one (01:08) Intro: 45 years of Mark & Ed, and documenting the inflection points of life (03:11) The Fed vs. the market — who sets rates? (04:57) 2020: the article Burton thought was uncontroversial (10:20) Volcker, and breaking the back of 1970s inflation (11:00) The arbitrage principle — and the mortgage example (14:55) Inside the repo market (19:00) Money supply grew 3% in 13 weeks — what that means (22:07) How the monetarists fell out of favor (24:46) COVID inflation: no angels, both administrations (26:12) A short history of the Federal Reserve (30:15) How the market read July 30th (32:34) The wildcard: hyperscaler capital spending (33:44) How Burton and his students really use AI (39:59) Closing: documenting a friendship Guests: Mark Loehr is CEO of Open Exchange. He went to Wall Street on Burton's advice, learning options theory just as the Cboe was being developed in 1975. Professor Ed Burton has taught economics for 58 years, at Cornell and the University of Virginia, and has likely taught more undergraduates than any economist in history. This fall he teaches the largest 400-level finance course at UVA. This episode documents the personal views of the speakers and is for informational purposes only. It is not investment advice.

Six months ago, the Fed dot plot was pointing toward rate cuts. The consensus on Wall Street, in academia, and in financial media was convergent: relief was coming for borrowers. Professor Edwin Burton saw it differently.   In this episode of Rubber Meets the Road Economics, Burton — one of the University of Virginia's most respected financial economists — returns to explain why that consensus has now fully reversed, and what it signals for the months ahead. The Fed held its target this week at 3.5–3.75%. But the real story isn't what the Fed did. It's what the market is doing — and why Burton believes the pressure is decisively upward on rates.   The conversation covers:   Why money supply growth jumping from ~3–4% to 7% annually in just three months is the real inflation indicator nobody's watching Burton's revised inflation forecast: from 2.5% to approximately 4% by year-end How the Iran War's closure of the Strait of Hormuz is affecting Brent crude (briefly $128/barrel) — and why America is relatively insulated while Europe and Asia aren't The American household budget crisis hiding in plain sight: $10,000/year in property taxes, $20–25,000/year in healthcare, on a median Virginia income of $80,000 Why Jamie Dimon's bond crisis warning deserves a serious hearing — and why the nation's liquidity problem matters more than its asset base The Spirit Airlines bailout debate: why bankruptcy is the right tool, and why the government should get out of the way The single most clarifying argument in this episode — that interest rates are set by supply and demand in the $14 trillion daily repo market, not by whoever carries a briefcase into the Eccles Building Why Kevin Warsh's simultaneous goals of lower rates and a smaller Fed balance sheet are "two incompatible views" — and why he'll find that out fast   This episode is essential listening for investors recalibrating bond exposure, economists tracking monetary transmission, and anyone trying to understand why economic aggregates look reasonable while family budgets feel impossible.

Investor Hunter Craig sits down with Professor Edwin T. Burton of the University of Virginia on Fed meeting day — March 17, 2026. The Federal Reserve is expected to hold rates steady, and Professor Burton explains why there is no path to lower rates without triggering inflation. From there, the conversation ranges across the Iran war’s muted effect on oil markets, a dangerously weakening U.S. economy, and the deep structural vulnerabilities in both public equities and private credit. The episode’s sharpest analysis targets the Magnificent Seven: Professor Burton argues that most of the AI capital expenditure being capitalized on balance sheets should actually be expensed as a cost of doing business — which would reveal that earnings for the S&P’s biggest names are flat or falling. He closes with a warning about private credit run risk, the structural problem facing firms like Blue Owl and Blackstone, and why retail investors in private credit funds may not understand what they actually own.   DISCLAIMER The content of this podcast is for informational and educational purposes only. Nothing discussed in this episode constitutes financial, investment, legal, or tax advice. The views and opinions expressed are those of the host and guest and do not represent the positions of the University of Virginia or any other institution. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal. Listeners should consult a qualified financial advisor before making any investment decisions. Statistical figures cited during the episode reflect the guest’s characterizations at the time of recording and may differ from independently verified data; see the market data table in these show notes for fact-checked figures.   Key Market Data (as of March 17, 2026) Indicator Value 2-Month U.S. Treasury Yield 3.69% 10-Year U.S. Treasury Yield 4.20% Fed Funds Target Rate 3.50– 3.75% Mortgage Rates (30-yr est.) ~6.30– 6.40% Brent Crude Oil ~$102/bbl (briefly $120) Q4 2025 GDP (annualized) 0.7% (revised down) S&P 500 Change Since Iran War Began (approx.) -1 to -2% OpenAI Projected Loss (2026) ~$14 billion (note: Prof. Burton cited $80B in episode; verified figure is ~$14B for 2026)   Timestamped Topic Guide Timestamp Topic 00:00 Intro — Hunter and Professor Burton set the stage on Fed meeting day 00:45 Fed Prediction: rates hold; no cut possible; Walsh confirmation and what it means 02:00 Mortgage rates at 6.30–6.40%; debt market saturated at every level 02:45 Iran war and oil: why $120/bbl Brent matters less than it once did 04:00 Oil as an economic tax, not an inflation driver; U.S. now a service economy 04:45 Q4 GDP revised to 0.7%; employment weakening; recession risk rising 05:30 Stock market’s puzzling calm: barely -1 to -2% since Iran war began 06:00 Magnificent Seven and the AI capex accounting problem 07:30 Should AI data center spend be expensed, not capitalized? Burton says yes. 08:00 Meta: full-year 2025 capex ($72B) exceeded net income ($60B); cash flow under pressure 08:30 The AI moat problem: 47 free competitors; OpenAI’s mounting losses and cash burn 10:00 Why rates won’t fall: deficits, debt auctions, political gridlock 11:00 Deficits grow in recession; neither party has a credible spending plan 12:30 Can the U.S. afford the Iran war? Political coalition fracturing 13:30 Fed’s real power: printing money vs. market forces; inflation risk of cutting 15:00 Private credit: the retail investor misunderstanding and run risk 16:30 Blue Owl and Blackstone: why headlines matter more than contract terms 19:00 Private equity continuation funds; software company hangover 20:30 University endowments: Princeton at 4%/yr while markets return 20% 21:30 Bearish wrap-up: economy, stocks, politics all pointing down 22:00 Professor Burton’s self-aware caveat: “I do have a tendency to be bearish”  

With the Dow crossing 50,000 and AI capital spending reaching historic levels, are we in a bubble—or at the dawn of a new economic era? This week, investor Hunter Craig sits down with Professor Edwin Burton of the University of Virginia to unpack the real economics behind the AI hype. Professor Burton explains why the software sector got hammered after new AI coding tools launched, where AI truly excels (and where it’s dangerously overrated), and why the companies leading the AI race today may not be on top five years from now. They also tackle the falling U.S. dollar, the ballooning national debt, and Professor Burton’s own AI-generated model for predicting Fed interest rate moves. Key Market Data (as of Feb. 11, 2026) 2-Month Treasury Yield 3.69% 10-Year Treasury Yield 4.17% Dow Jones Industrial Average 50,000+ (record high) January Jobs Report 130,000 (above consensus) U.S. National Debt ~$39 trillion Debt per U.S. Taxpayer ~$355,000   Topics & Timestamps 00:00 Introduction to the Podcast 00:28 Current Economic Landscape 01:03 AI and Market Bubbles 02:50 Capital Spending and Economic Growth 04:53 AI's Role and Limitations 08:10 Impact of AI on Industries 13:28 Currency Movements and Economic Implications 17:09 Predicting Fed Decisions with AI 23:50 National Debt and Healthcare Costs 26:14 Conclusion and Farewell   Key Quotes “Claude Code can do it in an hour or less. That’s remarkable. So that’s why I think it’ll make people productive.”  — Professor Burton on AI’s real-world power “If you scrape the whole world for all the economics information and you had all the information at your fingertips, you might not know anything.”  — Professor Burton on AI’s limitations “The genius is gonna be the person who looks at this stuff and says, ‘I see what it can do’—that person’s gonna be the next Uber or Amazon.”  — Professor Burton on the AI opportunity “Those who are looking for 5% mortgages—it’s not gonna happen.”  — Professor Burton on the national debt and interest rates Mentioned in This Episode Supremacy by Parmy Olson (Bloomberg) — history of AI development Our Dollar, Your Problem — by Kenneth Rogoff Claude Code by Anthropic — AI coding tool used by Professor Burton to build his Fed prediction model Companies discussed: Nvidia, Meta, Google, Apple, Palantir, OpenAI, xAI, McKinsey, Bain, BCG, Amazon, Uber, Microsoft   Credits Host: Hunter Craig Guest: Professor Edwin T. Burton, University of Virginia Producer/Editor: Awkward Sage Media Subscribe wherever you get your podcasts.