Nixon didn't abandon gold because economists suddenly discovered some brilliant new theory. He did it because the math had already sentenced the system to death. By August '71, Fort Knox was down to its last $11 billion in gold while foreign governments held at least $33 billion in paper dollars screaming for redemption. That's not a liquidity problem. That's a corpse with rigor mortis. And that's just the official tally; the real killer was the eurodollar market, that offshore shadow banking system nobody wanted to talk about, where another $50-70 billion in unredeemable IOUs were sloshing around. Meanwhile, Washington was drowning in $400 billion of federal debt with inflation hitting 6% which was a death spiral where every new bond issuance needed higher interest rates to attract suckers, which only accelerated the bleed-out. France wasn't just cashing checks; they were sending battleships to haul away physical gold while the Fed played musical chairs with reserves. Default wasn't a choice. It was inevitable. Nixon just picked how to default: either formally welch on bond payments (catastrophic) or slam the gold window shut (disguised catastrophe). He chose the quiet betrayal, letting the dollar become pure fiat so Congress could keep funding Vietnam and welfare programs without taxing a soul. That's the original sin. Not just breaking gold's back, but breaking the link between spending and accountability. Fast forward to today: $35 trillion in debt, BRICS nations stockpiling gold while ditching dollars, and your grocery bill doubling not because of "supply chains" but because we've spent fifty years printing to paper over every bad bet. Nixon didn't save the economy. He gave politicians a credit card with no limit and told your grandchildren to pick up the tab.
It didn't have enough gold to pay its bonds, so it could either keep the integrity of the dollars intact while defaulting on the bonds, or keep the integrity of the bonds (as measured in dollars) intact while defaulting on the dollars. The latter option allowed it to last a while longer before anyone would notice.
This choice was made some decades before the official day on which the gold standard ended. By 1971, it had already printed dollars to pay its bonds and didn't have nearly enough gold for foreign countries to be able to withdraw all their gold.
