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.

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:

Chapters:

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:

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.

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)

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.

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

“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

Host: Hunter Craig

Guest: Professor Edwin T. Burton, University of Virginia

Producer/Editor: Awkward Sage Media

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Hunter Craig sits down with Professor Edwin T. Burton of the University of Virginia to break down the most pressing economic issues of the moment: the Federal Reserve’s upcoming meeting, the meaning behind falling short-term rates and stubborn long-term rates, the fragility of today’s housing market, and whether the U.S. has already slipped into a debt spiral.

Professor Burton also uncovers what’s really happening with global currency dynamics, the potential end of the current tariff regime, and the likely trajectory of inflation in 2026. The episode closes with a frank look at artificial intelligence — what AI is genuinely good at, what’s overpromised, and whether the massive capital pouring into AI represents a bubble.

If you’re trying to understand inflation, interest rates, tariffs, national debt, or how AI fits into the bigger economic picture, this episode offers rare clarity.

The Fed’s Next Move

Housing Market Pressures

The U.S. Debt Spiral

Global Currency and Trade Dynamics

Artificial Intelligence: Hype and Reality

Investor Takeaways

Professor Edwin T. Burton has been a cornerstone of the University of Virginia’s Department of Economics since 1988, where he has taught more third- and fourth-year students than anyone in the department’s history. A graduate of Rice University and Northwestern University, he brings both academic rigor and real-world fluency to the study of financial markets, behavioral finance, and monetary policy.

Widely known for making complex economic ideas accessible, Professor Burton’s classes at UVA have launched generations of students into careers in finance, analytics, and policy. His dedication to mentorship runs so deep that the department’s undergraduate career office was renamed the Edwin T. Burton Economics Career Office in his honor — a testament to the impact he’s had on thousands of young economists.

Beyond the classroom, Professor Burton is a sought-after commentator on issues like inflation, tariffs, and global debt dynamics, helping audiences understand how large-scale economic forces shape everyday financial realities. His mix of clarity, candor, and grounded insight makes him a trusted guide through the noise of economic news — and an ideal guest for conversations that ask what today’s headlines really mean for investors.

The information provided on this podcast is for educational and informational purposes only. It is not intended as financial advice and should not be relied upon as such. All opinions expressed by the hosts, guests, or participants are solely their own and do not reflect the views of any companies or organizations they may be affiliated with. We recommend that you consult with a qualified financial professional before making any financial decisions. Remember, investing and financial decisions carry risks, and it is important to do your own research.

In this episode, investor Hunter Craig sits down with Professor Edwin T. Burton of the University of Virginia to discuss the upcoming Federal Reserve meeting, its implications for interest rates, and what the Fed can — and can’t — control. Professor Burton offers his signature mix of sharp humor and deep economic insight as he unpacks the paradox of record-breaking stock markets amid mass layoffs, explores historical lessons from the 1929 crash, and shares his contrarian view on U.S.–China trade.

00:00–02:30 – The Federal Reserve’s Next Move

Professor Burton predicts a 25-basis-point rate cut and explains why the Fed is often following — not leading — the market.

02:30–06:30 – The Stock Market Paradox

While the economy remains weak for many Americans, the S&P 500 keeps setting records. Burton explains how a handful of tech giants are driving the illusion of prosperity.

06:30–11:30 – Lessons from 1929

Burton takes us back to the Great Depression, connecting historical monetary mistakes with today’s overexpansion of the money supply.

11:30–21:00 – Tariffs and China

A candid, controversial take: Burton argues that tariffs weaken American competitiveness and that trade with China is beneficial for both economies.

21:00–24:00 – Predictions and Final Thoughts

Hunter tests Burton’s track record on Federal Reserve predictions — and hears a hilarious confession about Burton’s stock-picking history.

Guest Bio

Professor Edwin T. Burton is a Professor of Economics at the University of Virginia, known for his expertise in financial markets, monetary policy, and behavioral finance. He is a sought-after commentator on the Federal Reserve, market trends, and U.S. fiscal policy. With a distinguished academic and professional background, Professor Burton blends academic rigor with real-world insight in every conversation.

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Disclaimer:

The information provided on this podcast is for educational and informational purposes only. It is not intended as financial advice and should not be relied upon as such. All opinions expressed by the hosts, guests, or participants are solely their own and do not reflect the views of any companies or organizations they may be affiliated with. We recommend that you consult with a qualified financial professional before making any financial decisions. Remember, investing and financial decisions carry risks, and it is important to do your own research.

Produced by Awkward Sage Media.

In this episode of Rubber Meets the Road Economics, investor Hunter Craig sits down with Professor Edwin T. Burton from the University of Virginia to break down the economic realities behind the AI boom.

While tech companies are pouring billions into artificial intelligence, the rest of the economy is slowing — a trend masked by massive capital expenditures in data centers, chips, and defensive spending. Professor Burton explores whether AI is truly creating value or simply inflating numbers, what hidden distress can be found in recent bankruptcies, and how high interest rates and chaotic tariff policies are reshaping business realities.

They also discuss the Fed’s upcoming decisions, the power of the repo market, and why inflation may be sticking around longer than policymakers hope.

Professor Edwin T. Burton is a distinguished economist, investor, and professor at the University of Virginia. His work bridges academic insight and real-world market behavior, with deep expertise in monetary policy, investment strategy, and financial market structure. Professor Burton is known for his clear, candid approach to explaining complex economic issues — and for being unafraid to question the consensus.

The information provided on this podcast is for educational and informational purposes only. It is not intended as financial advice and should not be relied upon as such. All opinions expressed by the hosts, guests, or participants are solely their own and do not reflect the views of any companies or organizations they may be affiliated with. We recommend that you consult with a qualified financial professional before making any financial decisions. Remember, investing and financial decisions carry risks, and it is important to do your own research.

Investor Hunter Craig sits down with University of Virginia economist Professor Edwin Burton to break down the latest economic signals as the Federal Reserve heads into a pivotal meeting. With the S&P 500 topping 6,600 and Treasury yields hovering around 4%, the professor explains why he expects a 25-basis-point rate cut—and why a 50-point cut would create messy arbitrage opportunities.

They also cover:

Professor Burton offers a candid view of the U.S. economy’s next moves and why caution may be the smartest investment.

Guest Bio

Professor Edwin T. Burton is a renowned economist and long-time faculty member at the University of Virginia. Known for his clear, incisive analysis of markets and monetary policy, Professor Burton has authored influential works on interest rates and investment strategy and is a frequent commentator on national economic issues.

Disclaimer

The information provided on this podcast is for educational and informational purposes only. It is not intended as financial advice and should not be relied upon as such. All opinions expressed by the hosts, guests, or participants are solely their own and do not reflect the views of any companies or organizations they may be affiliated with. We recommend that you consult with a qualified financial professional before making any financial decisions. Remember, investing and financial decisions carry risks, and it is important to do your own research.

In this Labor Day conversation, investor Hunter Craig and University of Virginia economist Professor Edwin Burton break down the latest forces shaping the U.S. economy. With the September 17 Federal Reserve meeting looming, the discussion covers where rates are headed, the real limits of Fed power, and the political tug-of-war over central bank independence.

Professor Burton also shares sharp insights into America’s mounting deficit, the shaky ground under AI-driven capital expenditures, and why tariffs act more like a sales tax than a growth policy. From inflation trends to Warren Buffett’s blunt solution for Congress, this episode delivers clarity on issues that impact us all.

Key Topics:

Why the Fed is likely to cut rates by 25 basis points at the September 17 meeting

The misunderstood limits of Federal Reserve power and its reluctance to overuse the balance sheet

Central bank “independence”: myth, politics, and global cautionary tales

U.S. consumption and investment spending — and what they signal for growth

The AI capital boom: Porsche-level hype or Honda-level utility?

Why today’s equity valuations echo dot-com era bubbles

Tariffs as sales taxes and their hidden cost to American households

Why the U.S. deficit cannot be solved by “growing our way out”

Warren Buffett’s simple (but unlikely) fix for Congressional overspending

Guest Bio:

Professor Edwin T. Burton is Professor of Economics at the University of Virginia and a former partner at Rothschild, Inc. He has also served on the faculties of Cornell, Princeton, and the University of Chicago. His expertise spans financial markets, the Federal Reserve, and economic policy.

Disclaimer:

The information provided on this podcast is for educational and informational purposes only. It is not intended as financial advice and should not be relied upon as such. All opinions expressed by the hosts, guests, or participants are solely their own and do not reflect the views of any companies or organizations they may be affiliated with. We recommend that you consult with a qualified financial professional before making any financial decisions. Remember, investing and financial decisions carry risks, and it is important to do your own research.