31. Inflation Is Coming: Ed Burton & Mark Loehr on the Fed's July 30th Inflection Point

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.