In 2025, Acting Consumer Financial Protection Bureau (CFPB) Director Russell Vought ordered the cessation of all supervision and examination activity, effectively halting the agency’s regulatory functions.
This move reignited discussions about financial oversight and whether deregulation is the right path forward. However, the core issue is not regulation itself—it is the very nature of our fiat-based financial system.
Fiat money, unbacked by tangible assets, allows central banks and governments to manipulate monetary policy at will. This creates economic distortions, encourages excessive credit expansion, and leads to recurring financial crises.
Regulatory frameworks exist to mitigate these risks, but they cannot fundamentally solve the problem.
The only sustainable path forward is a transition to a sound money system, where currency is backed by real assets like gold or other tangible commodities. Without addressing the flaws of fiat currency, neither regulation nor deregulation can provide lasting financial stability.
The Role of the CFPB and the Flaws of Fiat Money
The CFPB was established in response to the 2008 financial crisis, which exposed rampant predatory lending, deceptive financial products, and inadequate consumer protections.
While the agency has played a role in enforcing financial regulations and protecting consumers, its existence highlights a deeper problem: fiat money enables reckless financial practices that necessitate regulatory intervention in the first place.
Because fiat currency can be expanded at will, financial institutions operate with the expectation of bailouts and easy credit.
This fuels speculative bubbles, incentivizes high-risk lending, and distorts the natural balance of the market. Regulation is required to curb these excesses, but it is ultimately a band-aid solution for a system that is inherently unstable.
Deregulation Will Not Solve the Problem
Advocates of deregulation argue that reducing government oversight will lead to a more efficient and innovative financial system. They claim that excessive regulation stifles economic growth, increases bureaucracy, and limits free-market competition.
While some regulations do create inefficiencies, removing them without addressing the root cause—fiat currency—will not create a more stable system.
Historically, deregulation without monetary reform has led to disastrous consequences. The savings and loan crisis of the 1980s, caused by relaxed lending regulations, resulted in a costly taxpayer-funded bailout.
The 2008 financial crisis, fueled by unchecked mortgage-backed securities and loose monetary policy, demonstrated how deregulated financial markets can create systemic risk when operating within a fiat framework.
Without sound money principles to enforce discipline, deregulation alone will only exacerbate financial instability.
Why a Fiat System Requires Heavy Regulation
A fiat-based financial system relies on trust in central banks and government institutions rather than intrinsic value. Because central banks manipulate interest rates and expand the money supply, fiat currency systems encourage risk-taking, excessive leverage, and speculative bubbles.
Regulation becomes necessary to prevent financial misconduct and maintain stability. Without oversight, predatory lending, fraud, and reckless banking could lead to repeated crises.
This creates a dilemma.
The fiat-based system requires regulation to prevent collapse, but regulation itself is often inefficient and prone to corruption. Removing regulation without addressing the fiat money problem could lead to even greater instability.
However, a sound money system would naturally reduce the need for such regulations by enforcing discipline through real asset backing. Regulation in a fiat system is a reactionary measure seeking to contain the systemic risks inherent in artificial credit expansion and inflationary policies.
*********
