Another disturbing development is that any talk about the national debt has disappeared from anyone’s radar screen. Markets have prompted Fed chairman Jay Powell to reverse course and become “policy fluid,” Gundlach said. “Once you do that anything can happen.” Around the world, some central bankers think they should decide the price of mortgages. “Why shouldn’t the Fed determine the price of soybeans?” Gundlach asked rhetorically.

Both Booth and Gundlach cast some doubt that the 3.2 percent GDP growth number for 2019’s first quarter was as strong as it looked. Among the fishy statistics was the GDP deflator. “A lot of math went into that number but not a lot of strength,” said Booth, who has written recently about consumer weakness.

Gundlach interpreted the upbeat reaction to a surge in consumer borrowing as a sign of complacency and denial. “Everyone says it’s a great thing because it shows consumers are feeling great,” he noted. “Consumers are actually falling behind.” That is showing up in weak retail sales.

At this point, Sherman brought up the state of the credit markets. Booth, who had served as an advisor to former Dallas Fed President Richard Fisher, commented that current Fed chairman Jay Powell comes out of the private equity world and is focused on the credit markets. What happened last fall when the S&P 500 fell 19.8 percent isn’t what scared Jay Powell, she said. What left him queasy was that 14 days after GE bonds traded into junk territory on Halloween, the junk bond market “absolutely shut down.” It stayed shut—with not a single issuer able to sell new junk bonds—for 41 days.

A huge amount of triple B-rated debt (one level above junk) “lives in the private equity world,” Booth continued. “Some junk bonds trade by appointment only. No one knows what will happen if we see a daisy chain of liquidations.”

Gundlach added that if the rating agencies applied traditional yardsticks, 45 percent of triple B bonds would be rated as junk today. With uncertainty so pervasive, he maintains that the bond market is very worried that in the next recession, interest rates could head higher. For this to happen, the Fed would have to lose control of the bond market, an event some have prophesied.

Come the next recession, there are likely to be calls for more QE, or its distant cousin MMT (Modern Monetary Theory) or a Universal Basic Income (UBI), which is garnering a favorability rating north of 40 percent in many polls. Gundlach noted that obscure presidential candidate Andrew Yang wants to give every American, including Jeff Bezos, $1,000 a month. Yang doesn’t believe it will act as a disincentive to work. “What he is saying is they’ll buy more organic vegetables.” Gundlach suspects they’ll “buy more beer.”

That said, he voiced sympathy with millennials laden with student loan debt. They see corporations getting big tax cuts and billionaires on Wall Street getting bailed out. With millennials wielding more electoral clout, Booth jokingly predicted that by election day, there might be a bipartisan agreement to forgive all student loan debt.

Sherman noted that the Fed had typically lowered the Fed funds rate by 4.0 percent to 5.0 percent in recent recessions. Were it to do so next time, it would require negative rates.

Experimenting with negative rates in America could prove catastrophic in Booth’s view. That’s because there are so many different federal and state financial entities here. “You are talking about trillion-dollar industries [and entities] that would disappear overnight” like the state of Illinois. Pensions would be screwed in many places.