Remember the Gnomes of Zurich?

The crackdown on Swiss banks (preceding post) sparked an old memory: Wonder whatever happened to the Gnomes of Zurich?

In the 1960's the Brits blamed the Gnomes of Zurich (previously known as Swiss bankers) for speculating against the pound. George Goodman, writing as "Adam Smith," popularized the term in his bestseller The Money Game. Goodman even claimed to know one of the Gnomes personally.

The attack on sterling grew so vicious, Goodman writes, that the Federal Reserve Bank of New York had to arrange a transatlantic cash transfusion for the Brits, who were furious:

George Brown lashed out at the International Conspirators who were out to make a killing by busting the pound – and England in the process. "It is the Gnomes of Zurich," he said, rolling the worlds out with hatred, lingering over them, pronouncing the g hard in Gnomes, making it a two-syllable word. Thus the Gnomes of Zurich came to stand for International Speculators, or for skeptics. But as I told you most Gnomes are in Basel and Geneva, and the Zurich Gnome is at my house.

"Skeptics, yes," said my friend the Gnome of Zurich. "We stand for disbelief. We are basically cynical about the ability of men to manage their affairs rationally for very long. Particularly politicians. Politicians promise things to the people for which they cannot pay.

Does the Gnomes' speculative attack on the pound remind you of a financial crisis in the news recently? Think Greece.

THE GNOMES OF ZURICH