Joseph in Egypt |
27 June 2018 (latest revision: 16 March 2024)
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Money with a holding fee existed in ancient Egypt for over 1,500 years. The state ran granaries. Grain was the primary food source for the Egyptians. When farmers came with their harvest, they would get a receipt telling how much they brought in and on what date. A baker could return the receipt and exchange it for grain after paying for the storage cost and loss due to degradation.
The Egyptians used these receipts as money, as grain was a commodity everyone needed.1 2 Because of the storage costs, the receipts gradually lost value. With this kind of money, you might have interest-free loans. Someone in possession of this money who likes to save it will lose by storing it and can keep his capital intact by lending it without interest. There is no evidence that this happened.
The origins of the grain storage remain unclear. The government collected a portion of the harvests as taxes and had to store it. This storage probably proved convenient for farmers. They didn't have to store and sell their grain themselves. And it made sense to have a public grain reserve in case of harvest failures.
The grain storage relates to a story in the Bible. As the story goes, the Pharaoh had dreams his advisers couldn't explain. He dreamt about seven lean cows eating seven fat cows and seven thin and blasted ears of grain devouring seven full ears of grain. Joseph explained those dreams to the Pharaoh.
He told the Pharaoh that seven years with good harvests would come, followed by seven years with crop failures. He advised the Egyptians to store food for meagre times. They followed his advice and built storehouses for grain. In this way, Egypt survived the seven years of scarcity.
The receipts gradually lost their value over time to cover the storage cost. It was similar to buying stamps to keep the money valid, like in Wörgl. The grain money circulated until the Romans conquered Egypt around 40 BC. The grain money circulated for over 1,500 years. And it did not end in a debt crisis. It suggests a holding fee on money or negative interest rates can create a stable financial system that lasts forever.
You can't eat money. Storing food makes more sense than saving money, even when you make losses on the storage. Harvests become increasingly unpredictable due to global warming and intensive farming. We suffer from a money delusion by thinking we can buy food. But humanity has only enough food in storage for a few months. Joseph's advice to the Pharaoh to store more food makes more sense than ever. For that, we may have to end the money delusion.
Featured image: Joseph interpreting the Pharaoh's dream. Illustrations for La Grande Bible de Tours. Gustave Doré (1866). Public Domain.
References
1. The Future Of Money. Bernard Lietaer (2002). Cornerstone / Cornerstone Ras.
2. A Strategy for a Convertible Currency. Bernard A. Lietaer, ICIS Forum, Vol. 20, No.3, 1990. http://folk.ntnu.no/tronda/finans/others/interest-free-money.txt