The key innovation was the creation of what were called the “perpetual endowments" or "inexhaustible treasuries.” Say a lay supporter wished to make a contribution to her local monastery. Rather than offering to provide candles for a specific ritual, or servants to attend to the upkeep of the monastic grounds, she would provide a certain sum of money-or something worth a great deal of money—that would then be loaned out in the name of the monastery, at the accepted 15 percent annual rate. The interest on the loan would then be earmarked for that specific purpose.
The key innovation was the creation of what were called the “perpetual endowments" or "inexhaustible treasuries.” Say a lay supporter wished to make a contribution to her local monastery. Rather than offering to provide candles for a specific ritual, or servants to attend to the upkeep of the monastic grounds, she would provide a certain sum of money-or something worth a great deal of money—that would then be loaned out in the name of the monastery, at the accepted 15 percent annual rate. The interest on the loan would then be earmarked for that specific purpose. An inscription discovered at the Great Monastery of Sanci sometime around 450 AD provides a handy illustration. A woman named Harisvamini donates the relatively modest sum of twelve dinaras to the "Noble Community of Monks.” The text carefully inscribes how the income is to be divided up: the interest on five of the dinaras was to provide daily meals for five different monks, the interest from another three would pay to light three lamps for the Buddha, in memory of her parents, and so forth.
I have been told that in some of the more lawless parts of the former Soviet Union, gangs prey so systematically on travelers on trains and buses that they have developed the habit of giving each victim a little token to confirm that the bearer has already been robbed.
One of the most important forms of currency in England in Henry's time were notched "tally sticks” used to record debts. Tally sticks were quite explicitly IOUs: both parties to a transaction would take a hazelwood twig, notch it to indicate the amount owed, and then split it in half. The creditor would keep one half, called "the stock” (hence the origin of the term “stock holder”) and the debtor kept the other, called “the stub” (hence the origin of the term “ticket stub.") Tax assessors used such twigs to calculate amounts owed by local sheriffs. Often, though, rather than wait for the taxes to come due, Henry's exchequer would often sell the tallies at a discount, and they would circulate, as tokens of debt owed to the government, to anyone willing to trade for them.
In fact, our standard account of monetary history is precisely backwards. We did not begin with barter, discover money, and then eventually develop credit systems. It happened precisely the other way around. What we now call virtual money came first. Coins came much later, and their use spread only unevenly, never completely replacing credit systems. Barter, in turn, appears to be largely a kind of accidental byproduct of the use of coinage or paper money: historically, it has mainly been what people who are used to cash transactions do when for one reason or another they have no access to currency.
I launched into historical background, explaining how, during the '70s oil crisis, OPEC countries ended up pouring so much of their newfound riches into Western banks that the banks couldn't figure out where to invest the money; how Citibank and Chase therefore began sending agents around the world trying to convince Third World dictators and politicians to take out loans (at the time, this was called “go-go banking”); how they started out at extremely low rates of interest that almost immediately skyrocketed to 20 percent or so due to tight U.S. money policies in the early 'Pos; how, during the '8os and '90s, this led to the Third World debt crisis; how the IMF then stepped in to insist that, in order to obtain refinancing, poor countries would be obliged to abandon price supports on basic foodstuffs, or even policies of keeping strategic food reserves, and abandon free health care and free education; how all of this had led to the collapse of all the most basic supports for some of the poorest and most vulnerable people on earth.
The core argument is that any attempt to separate monetary policy from social policy is ultimately wrong. Primordial-debt theorists insist that these have always been the same thing. Governments use taxes to create money, and they are able to do so because they have become the guardians of the debt that all citizens have to one another. This debt is the essence of society itself. It exists long before money and markets, and money and markets themselves are simply ways of chopping pieces of it up.