the total number of U.S. dollars circulating in the United States
and abroad steadily grew, the U.S. gold reserves backing those dollars
steadily dwindled. International financial leaders suspected that
the United States would be forced either to devalue the dollar or
stop redeeming dollars for gold.
dollar problem was particularly troubling because of the mounting
number of dollars held by foreign central banks and governments:
1966, foreign central banks and governments held over 14 billion
U.S. dollars. The United States had $13.2 billion in gold reserves,
but only $3.2 billion of that was available to cover foreign dollar
holdings. The rest was needed to cover domestic holdings.
governments and foreign central banks tried to convert even a quarter
of their holdings at one time, the United States would not be able
to honor its obligations.