I've never understood the full meaning of that decision. Can someone explain the origins and consequence of Nixon decision happened on August 15, 1971 ?
Was the anterior situation unsustainable past 1971 ?
The Bretton-Woods system had been set up in 1944 basically to stabilize international trade after the conclusion of the Second World War, and aid in reconstruction of Europe. Specifically, it hoped to prevent the break down of international trade that occured through the 'beggar-thy-neighbor' policies of the Great Depression, which largely ended up reducing international trade to currency blocks such as the Sterling zone etc.
Basically, Bretton-Woods required that all currencies be pegged to the US dollar to maintain stable exchange rate, and in turn, the US dollar was convertible to gold, specifically at a rate of $35 per troy ounce. It's not a true gold standard, but a modified one. The value of the dollar is still determined like a fiat currency, it is just also fixed to a certain amount of gold. In effect, the Federal Reserve basically determined the base world market value of gold through it's currency operations.
It was unsustainable in the long term, largely because the value of gold was usually higher than the set exchange rate, and so the US gold reserve depreciated from 60% to about 22% of the world gold supply. In the face of the growing wealth of the rest of the world, and the huge obligations the US took on in Vietnam and in the Cold War arms race, it could no longer be sustained. Hence, the end of gold convertibility.