Byline: Ross Norman Sharps Pixley, London bullion brokers
[bar] T IS 40 years today since the end of the Bretton Woods agreement and indeed the end of the gold standard. Bretton Woods had been a financial discipline put in place to prevent central bankers expanding the monetary supply in an irresponsible way and to introduce fiscal discipline.
The Bretton Woods system collapsed under the weight of US trade deficits and the cost of funding the Vietnam War which meant that gold and international currencies were freely floated. For those that believe in the power of happy coincidences, the answer to current financial issues might just lie in the number 40. I'll explain.
A 40th anniversary is referred to as a ruby anniversary and we may find the answer to our economic woes in another ruby, that is ruby shoes in the Wizard of Oz, thought to be a monetary allegory for the gold standard.
The Wizard of Oz was published in 1900 by L Frank Baum (a keen political writer and populist) and released as a film in 1939.
In the original book Dorothy's shoes were silver but changed to ruby because Hollywood was going technicolour.
The Populist Movement of 1894 had wanted silver along with gold to be used as the backing for US dollars, thereby creating more dollars, thus devaluing dollars and therefore reducing the debt burdens that workers (and especially farmers) were labouring under. A form of quantitative easing if you like.
The interpretation of the film is clear. Dorothy (Everyman American) is lost in a (financial) storm. She is joined in her endeavours to find a solution by the Scarecrow (farmers), Tin Man (industrial workers) and Lion (pro-silver politicians). The Yellow Brick Road (gold standard) takes her some of the way there. …