This Day in History - Following the Advice of Milton Friedman, President Nixon ended the Gold Standard

I debated writing something up on this or not, but honestly a real break down of the nature of the Bretton Woods system and the post-Bretton world would be quite a lengthy post. Furthermore, to be authoritative, it'd need as much if not more citations than the post immediately preceding this one. So to be brief here's how Bretton Woods worked.

• Post WW2 - the US controls most of the world's gold, mostly because a lot of countries owed the US money and paid it in gold
• A lot of countries had US dollars
• At the Bretton Woods Conference (hence the name of the system)  it was agreed that it would be simpler to use a system where the dollar was "pegged" to a certain value of gold ($32/troy ounce) and then countries could simply exchange dollars between one another based on this peg
• In truth that's probably not a horrible idea, in basic principles, since paper is easier to move than gold.
• John Maynard Keynes thought this idea was horrible and proffered the idea of Special Drawing Rights. A currency that only nation states can own, whose value is based on a "basket" of other currencies.
• Several hundred billion SDRs exist today. You can Google around and find economists arguing that this should be the means by which accountability is reestablished in international accounts settling between nations

So in essence Bretton Woods was a system that benefited the US, because it allowed the US to hold a significant quantity of the world's gold, and be the creator of the world's means of settling debts between countries.  Arguments exist for why it was ended - the most plausible is that the US was mired in debt from its arms race with the USSR as well as the ever expanding cost of the Vietnam War; however, you can find arguments that since the USSR had significant gold deposits it could reasonably begin to build up a reserve of its own and attempt to usurp the dollar's position. I'll let you be the judge of that, and encourage you to read up on it if you're interested, because the issue is a debated one and there's no pure consensus - though I lean strongly to the US printing money to pay for Vietnam and thus being unable to maintain the gold peg.

If you want to read more, The Economist has an article on it for today.