We pickup this thought provoking story during the reign of
the 11th Dynasty of the Middle Kingdom of Ancient Egypt around 2000 BC.
It records the changing role of money and a great transfer of wealth during a
time of tremendous famine and social upheaval. As well as several Egyptian
writings from this period, this story is recorded in detail in the Old
Testament book of Genesis chapter 47 verses 13 to 26.
2000 years before Christ, Ancient Egypt enjoyed the benefits of a
sophisticated social structure with much of the wealth and trade of the then known
world. It was an economy that had been built on grain production and produce
from the fertile and agriculturally rich Nile River valley and Nile Delta
An estimated 95% of Egypt was unusable desert with little or no rainfall; but
regardless of rainfall and local climatic conditions, the Nile river, feed
from the vast sub continent of Africa, flooded
annually and ran year in and year out, providing a guaranteed water supply to
the rich soil of the valley and delta regions.
Much of the world’s supply of gold and silver had originated from
Egyptian controlled mines. At the time Egypt was producing an estimated
35,000 ounces of gold and 160,000 ounces of silver each year. While at this
time strict minted coinage hadn’t appeared,
gold and silver were significant items of wealth and an important part of
Most scholars who write of the era say the land of Egypt could be compared to
no other in the ancient world until Babylon appeared centuries later. It was
a place of splendor, remarkable influence, educational advancement, military
might and limitless wealth.
Several years earlier, a 30-year-old Semite prisoner named Joseph stood
before the Pharaoh and warned of a coming famine. It could be assumed that a
devastating famine would have been inconceivable to the minds of most people
of the day; who had grown accustomed and completely dependent on all the
benefits of an uninterrupted water supply feeding a rich fertile soil.
After God had interpreted Pharaoh’s dream through him, Joseph went onto
recommend that Pharaoh appoint a man to oversee the next 7 plenteous years,
including the building of granaries and storage of a portion of all the crops
grown. In one of the most moving stories of the old testament, Pharaoh then
appointed Joseph the son of Jacob not only as the overseer of Egypt’s
grain storage program, but in-fact "set him over all the land of
Egypt". Pharaoh would drive a hard bargain, and we can expect that,
during these years of abundance and plenty, his grain stocks would have been
accumulated at relatively low cost.
AS MONEY FAILS
Just as in Pharaohs dream, after 7 years of abundance came a harsh famine in
the land. In verse 14 of Genesis 47 we read "Joseph gathered up ALL the
money that was in the land of Egypt and Canaan into Pharaoh’s house for
the grain which they bought" and then in the next verse "give us
bread why should we die; for the money has failed.
What did the Egyptians mean when they said "the money had failed"?
Simply we can assume that that which was money one year had become valueless
the next. As we have examined in the past, money is a commodity that
everyone, in unison, places equal or near equal value in. In other words, the
money, that the free market had once placed value in, and under normal
conditions, had been used to facilitate trade, had now become utterly
valueless compared to life-giving grain.
In the formally normal economy, a grain grower would have happily sold his grain
for money (as he once did with Paraoh), but faced
with starvation for himself and his family, he would now part with ALL his
money for grain. Now GRAIN had become the new money in Egypt. In order to buy
food, the masses had been forced to pay Pharaoh all their money, and what
money was left in circulation had become utterly worthless.
AND NOW THE
The problem was the famine persisted and now the Egyptians were without food
In verse 16 and 17 they returned to Joseph who said "give your livestock
and I will give you bread; and Joseph gave them bread for their horses,
flocks, cattle and donkeys". In so doing that year the Egyptian people
gave up all their livestock to Pharaoh so they could buy bread to stay
But why did the Egyptian people give up their immeasurably valuable
livestock? Well livestock eat grain and they could no longer afford the grain
to feed the livestock.
This is interesting because it infers that the Egyptians valued their
livestock above their money. They parted with their money 1st to buy grain, which, during the 1st period they used to feed their
livestock as well as their family. As the famine dragged on and intensified,
they surrendered their livestock next.
Pharaoh willingly gave up grain for livestock because he knew how long the
famine would last and how much grain he had. Joseph had calculated they had
sufficient stocks to feed Pharaoh’s house, his servants, the livestock that he was acquiring, and also the people
of Egypt and surrounding regions, that would gladly give up all they had to
purchase the life-giving commodity.
The vast riches and wealth of the Egyptian people were being transferred to
Pharaoh’s house in exchange for grain that Pharaoh had acquired during
years of plenty, compared to now, at exceedingly low cost. The Egyptian
people were gladly giving up their money and livestock that were now of
little value to them, but of which Pharaoh knew, once the famine ended, would
again be of great value.
Still the famine persisted and in verse 20 we read that Joseph bought all the
land for Pharaoh for the Egyptians sold every man his field and so all the
land became Pharaohs.
SLAVES TO THE
By the time the famine had ended in the land,
Pharaoh had accumulated all the money, livestock and land in Egypt. In verse
25 the people said to Joseph "Let us find favor
in the sight of our lord and we will become Pharaohs servants.
Egypt went through a "currency crisis". Currency Crisis are something that we have witnessed many times in the
world since. The money that worked one day, all but ceased to work the next.
Not every form of money will always buy us a ticket out of our immediate
2nd - The vast majority of people were completely unprepared for what
was coming. While Pharaoh prepared for the coming famine on a national scale,
it can be assumed that most did not. While the biblical account doesn’t
explicitly say this, it is implied by their lack of personal stocks of grain
and much larger than necessary livestock levels. The masses have always lived
as though today will be the same as yesterday and tomorrow will be the same
When there seams to be an unending supply of the
essential commodities at low cost, people have the tendency to consume all
they have. Consider Proverbs 22 vs3
3rd - The people of Egypt went through a time of "value
questioning". Everything they had once put value in they now questioned.
Ultimately only the essential commodities, in this case grain, retained their
value. How much of what we put value in today is really essential? In the
Egyptian experience even traditional forms of assets or wealth, like
livestock and land, were traded at a fraction of their former value.
4th - Joseph and Pharaoh where clever investors. They accumulated
grain, money, livestock and land when the bidding price was low, and sold
them again when it was high. The rest of Egypt bought grain high, and sold
all they had, when the bidding was low.
Joseph monopolised the market of essential
commodities. How many of the assets we hold today have we bought at the top,
or near the top of the market? Alternatively are there essential commodities
we could acquire today while they are still relatively cheap?
5th – Changing economics and circumstances require a change of
strategy. For the tiller of Nile River 4000 years ago, high livestock levels
with little or no grain stocks may have yielded a higher rate of return in
plenteous years, but proved a poor strategy in difficult times; and so it
could be with us today.
These days of rapid change require re-positioning and often a change in
strategy. By careful planning, not only will we are to avoid becoming
Pharaoh's bond-servants, but we may well be on the right side of one of the
greatest wealth transfers in the history of the world.
Anglo Far-East Company
by Philip Judge
Philip Judge is the 3rd generation of a family that has had
substantial involvement in the Precious Metals markets. He has researched,
written and spoken on the gold, silver and commodities markets for over a
decade. Philip works in the marketing and operations department of The
Anglo Far-East Bullion Company, an internationally based Bullion Banking,
Investment Management and Financial Services Company