Michael Byrd, of the Austin Report offers some background:
Many of today's currency problems began in World War I when the gold standard was first abandoned.
On August 15, 1971, President Nixon severed the link between the U.S. dollar and gold. Since 1973, flexible exchange rates were introduced and chaos has prevailed in the global financial system. Jacques Rueff, an advisor to President Charles de Gaulle, described the situation in his book The Monetary Sin of the West: “Since the abandonment of the gold standard, i.e. the only system that ever worked, the world has been moving from one crisis to the next, from deflation to inflation, from economic boom to bust."
The sudden jump in the price of gold after central banks gave up on control was confirmation of a loss of confidence in the U.S. dollar. In the absence of a gold-market-valued U.S. dollar, investors chose to put their faith in gold alone. Consequently, the price of gold rose from $35 per troy ounce in 1969 to almost $850 in 1980. As a result, the value of the U.S. dollar fell against gold and has never recovered since 1971.
Note the similarities in the 1970's and today—rising commodity prices, record oil prices, an unpopular War while the government refuses to cut back other expenses, and a massive trade deficit. These factors combined with a trade deficit to create a situation in which the dollar was worth less than the gold used to back it.