Dollar Rests on State Power, Not Gold, Scholar Watkins Argues

Constitutional scholar William J. Watkins Jr. of the Independent Institute maintains the U.S. has abandoned the founders’ limited-government and hard-money framework. The national debt stands near 39.6 trillion dollars—roughly 115,000 dollars per American and 120 percent of GDP—while interest costs are projected to top one trillion dollars by fiscal 2026, eclipsing defense outlays. He links this to elastic readings of the spending and commerce clauses that expanded federal authority into general police powers.

Watkins notes the Constitution empowered Congress to coin only gold and silver and barred states from other legal tender. The move to paper began with Civil War greenbacks under Lincoln, advanced with the 1933 gold seizure and revaluation from 20 to 35 dollars an ounce, and ended in 1971 when dollar-gold convertibility ceased. “Paper money is really only tied to the coercive power of the federal government,” he says, labeling it a shell game lacking tangible backing. Gold now exceeds 4,100 dollars an ounce.

Foreign holders own about 9.5 trillion dollars in Treasuries, chiefly Japan, the UK and China. Coordinated sales could spark a Weimar-style crisis, he warns. Watkins urges a return to the enumerated powers promised in Federalist No. 45.