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Never really trustworthy, my filing system grows even more erratic under the Obama administration. I had in my possession, fairly recently, a clipping that said the British (and Australian) slang bloody was derived from by our lady. Now the clipping is bloody well gone, and I have no idea where it went or where it came from. So it'll have to be disputed in absentia.
The by our lady story has been around for a while, but several authorities say it's unlikely. At one time, I was betting on an alternate theory, having read somewhere that bloody had something to do with Christ's blood shed on the cross. The authorities, turning meddlesome, say this version is improbable too.
However, they're apparently not questioning the notion that a couple of old English slang words were indeed inspired by the Crucifixion — zounds, from “God's wounds,” and gadzooks, from “God's hooks.” The failure to challenge here may be because nobody has used these words in several hundred years — except for a basketball fan at Bud Walton arena, probably an English professor, who was heard to yell “Zounds, Pelphrey, thy defense stinks, varlet.” If you feel compelled to express similar sentiments, remember that zounds rhymes with “wounds” and not “hounds.” Hell has hounds; God has none that I know of.
The origin of bloody remains unclear. The Word Detective calls it “the inexplicable expletive.” I did learn from my research that while most Americans think of bloody as British, it's at least as common in Australia, where, according to Jonathon Green's Dictionary of Contemporary Slang, “it is so widespread as to be termed ‘the great Australian adjective' … often inserted between the syllables of other words or phrases, e.g.: abso-bloody-lutely.”
The reference to “the great Australian adjective” makes me wonder what “the great Arkansan adjective” is. Maybe the legislature will identify it for us. The legislators are fond of labeling things as Arkansas's official representative in various fields. During the current session, they've designated the pecan as the official nut. I have no problem with that, although I think the gun nuts may be more numerous.