“Here’s the really important point
The government doesn’t have to back every dollar with one ounce of gold.
It could say:
“We will redeem $X for one ounce of gold.”
How can they do that? If they say “We will redeem $100,000 for one ounce of gold, you’d have the greatest arbitrage in history, with you, me and every other bug and his dog frantically selling to the govt. for $100,000 and buying back at $4,500 on the open market, a price that would rapidly rise to be sure, but at the same time would eliminate the gold reserve entirely. {edit: Ha!! got that wrong – the gold reserve would increase as they acquired more gold for $100,000/oz.}
As far as I can determine, and I could only get back as far as 1911 with data as to how many USD notes were in circulation, paper money has never been backed by gold. How can they do it now?