30. Rates Up, Inflation Back, and Who’s Really Running the Fed

30. Rates Up, Inflation Back, and Who’s Really Running the Fed

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.

29. Is the U.S. Economy Heading for a Slowdown? Iran War and Rising Oil Prices, AI Capex Bubble, Federal Reserve Trap, and Private Credit Run Risk | Edwin Burton

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”

28. AI Bubbles, the Falling Dollar, and the Fed’s Next Move

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.

27. Are Tariffs About to Disappear? The Economic Signals to Watch

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. Episode Breakdown The Fed’s Next Move * Why falling two-month Treasury yields reveal the Fed’s likely rate decision * How recent money-supply actions signal a shift in policy * Why mortgage rates remain elevated despite easing in short-term yields Housing Market Pressures * Why supply remains artificially constrained * When homeowners may begin listing again * Expectation for national home-price behavior over the next few years The U.S. Debt Spiral * Why both spending and taxation have reached political limits * How U.S. debt compares to historical sustainability thresholds * Why entitlement structures create long-term structural pressure Global Currency and Trade Dynamics * The declining share of global payments conducted in dollars * How tariffs have strained relationships with European and Asian partners * Why political and legal pressures may force a shift in U.S. tariff policy Artificial Intelligence: Hype and Reality * What AI is truly good at — and where its abilities plateau * Why AI won’t replace scientific intuition or discovery * How overinvestment could trigger the next tech-sector correction * Whether the S&P 500 would look dramatically different without AI enthusiasm Investor Takeaways * Why staying in broad index funds remains a sound long-run strategy * What rising consumer weakness means for the next two years * How to think about volatility ahead 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.   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.

26. Tariffs, Trade, and Truth: The Real Economics of U.S.–China Relations

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. Episode Breakdown 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. Connect with the Show * Email: rubbermeetstheroadeconomicspod@gmail.com * Subscribe wherever you get your podcasts to stay updated on the latest economic insights. 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.