Chicago can’t go bankrupt… and the Fed is “not doing QE” while buying tens of billions in Treasuries to keep the funding markets from cracking. So what happens next: higher inflation, higher long rates, and a steeper yield curve — or a policy pivot that no one wants to admit?
In this episode of the Future’s Edge, Jim Iuorio and Bob Iaccino are joined by Jim Bianco (Bianco Research) for a fast, blunt conversation on what’s really happening beneath the headlines:
What we cover:
- Chicago’s fiscal trap: why investors still buy Chicago bonds, and the Chicago Public Schools as a massive junk issuer
- The real issue: Illinois’ constitution and why “no Chapter 9” changes everything
- Why 40% of Chicago’s budget is effectively paying for the past (pensions, retiree healthcare, and debt service)
- Two alarming datapoints: 911 call response deterioration and low murder clearance rates
- The Fed’s “Reserve Management Purchases” (RMP): why it looks and behaves like QE even if the label changes
- Repo market stress explained in plain English: how funding the Treasury market actually works
- The bigger problem: a $38T Treasury market growing alongside persistent deficits
- Fiscal dominance: why “issue more T-bills and cut rates to 1%” is a hand-grenade strategy
- Rates & the long end: why Bianco sees the curve steepening and long-term yields staying pressured
- AI and jobs: productivity vs disruption, and why the timeline may be longer than the hype suggests
- Population growth shock: what negative net immigration could mean for payroll expectations and markets
- Bitcoin & crypto: why Bianco is long-term bullish — and why he thinks the space “loses the plot” when it chases short-term “number go up”
If you want a clear, no-BS walkthrough of why the Fed is intervening, why deficits matter, and why long rates may not come down the way most expect, this one’s for you.
Follow/Find Jim Bianco: @biancoresearch
https://www.biancoresearch.com/
Follow along on social media:
Twitter: https://x.com/bob_iaccino
Twitter: https://x.com/jimiuorio
LinkedIn: https://www.linkedin.com/in/bob-iaccino/
LinkedIn: https://www.linkedin.com/in/james-iuorio/
Newsletter: http://theunfilteredinvestor.com/
Chapters:
00:00 Intro + why this episode matters
02:00 Chicago bonds, pensions, and “why anyone buys this paper”
05:00 Where it ends: services cut to pay the past
11:00 Why cities mattered historically — and why that’s changing
14:40 “Not QE” explained: Reserve purchases & how the Fed creates money
18:30 Repo market stress + financing the Treasury machine
20:50 Deficits, inflation, and the Fed as enabler
35:10 Population growth, immigration, and payroll math
39:10 Stagflation risk + why 3% inflation doesn’t “fix” affordability
41:20 Fiscal dominance + the long end and steepener trade
45:00 Bitcoin: adoption, disruption, and why the real enemy isn’t ETH