32. What Really Caused Lehman Brothers to Collapse in 2008? Professor Edwin Burton on the Repo Market

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.

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