There is a story in the Bible about a Pharaoh having bad dreams his advisors could not explain. He dreamt about seven fat cows being eaten by seven lean cows and seven full ears of grain being devoured by seven thin and blasted ears of grain. Joseph explained those dreams. He told the Pharaoh that seven years with good harvests would come followed by seven years with poor harvests. He advised the Egyptians to store food. They followed his advice and built storehouses for grain. In this way Egypt survived the seven years of scarcity.1
The food storage resulted in a financial system. The historian Friedrich Preisigke discovered that the Egyptians used grain receipts for money.2 Farmers bringing in the food received receipts for grain. Bakers who wanted to make bread, brought in the receipts which could be exchanged for grain. According to the Bible, Joseph took all the money from the Egyptians.3
As a consequence the grain receipts may have become money instead. Farmers bringing in grain did get receipts for the grain they brought in. Bakers who wanted to make bread, returned the receipts for which they received grain. The storage costs were settled when the receipts were exchanged for grain, hence the receipts lost value over time. The effect was similar to buying stamps to keep the money valid as happened in Wörgl. The actions of Joseph may have created this money as he allegedly proposed the grain storage and took all the money from the Egyptians.
During the reign of Ramesses the Great, Egypt became a leading power again. Some historians have suggested that Egypt’s wealth during the reign of Ramesses was built upon the grain money. The money remained in circulation after the introduction of coins around 400 BC, until the Romans conquered Egypt. The grain money was stable and survived for more than a thousand years. This suggests that negative interest rates can create a stable financial system and that it may be possible to have negative interest rates forever.
Featured image: Joseph interpreting the Pharaoh’s dream. Illustrations for La Grande Bible de Tours. Gustave Doré (1866). Public Domain.