The End of The Federal Reserve | Mel Mattison

Mattison says Iran’s damaged economy gives it reason to want the war to end, but he also describes the conflict as existential and Iran as unwilling to compromise; he says Trump may make concessions after the midterms. The war has also pushed up rates and inflation and weakened market sentiment, while Mattison’s year-end S&P 500 outlook depends in part on resolving both wars.

Mattison predicts Democrats will take the House and may win the Senate, with a House impeachment of Trump but insufficient Senate votes for removal. He argues the war and expected loss of congressional support would block a transformative housing bill or housing emergency declaration, and expects congressional conflict to bring renewed debt-ceiling scares.

Speakers say banks’ interest in retaining customer funds without paying interest contributes to opposition to tokenization and yield-bearing stablecoins, helping stall the Clarity Act. One speaker hopes executive-branch rulemaking can still establish crypto infrastructure that would be difficult to reverse, while Mattison expects the CFTC and SEC to continue digital-asset reforms under executive control.

Mattison expects AI adoption and compute demand to keep growing over the next five years, although he says the leading models and software approaches remain uncertain. A16Z figures cited by a speaker show only 2.2% household adoption in the U.S. but much higher spending among top users, while Mattison says U.S. AI companies will need memory from Micron, SK Hynix, and Samsung rather than China.

Speakers describe how businesses earn revenue from customer funds held without interest: payroll processors, for example, can collect interest on funds held for three or four days. The argument that 24/7 near-zero-cost settlement could let consumers pay bills from money-market funds or tokenized Treasury bills connects to the prospect of deposit shifts toward higher-yielding alternatives, which Mattison says has already pressured Schwab’s customer balances.

Mattison argues that heavy Treasury issuance, more than $40 trillion in debt, and the prospect of reaching $50 trillion constrain rate policy because yields near 6% could push government interest expense toward $2 trillion annually. He says Social Security payroll taxes cover about 80% of benefits, identifies Medicare as the larger funding challenge heading into the 2030s, and forecasts radical fiscal and economic changes in that decade.