The above cycle has had some non-obvious but important consequences where not everyone is thoroughly plugged in to the government currency using market.

Consider, for example, an Arab tenant farmer in the Levant of the late Ottoman Empire. He operates mostly without cash, eating his own produce and trading produce for goods and services from specialists in his village.

Then the tenant farmer gets hit with a tax bill (very often presented by his landlord who was likely the local tax agent). How is he to pay it? His landlord offers to “lend” him the cash in return for an exorbitant share of his crop come harvest. Officially, tax farming was abolished in the early 19th century, but this system was not materially different as far as the tenant farmer was concerned. The landlords found it very profitable.

Towards the end of the 19th century, in what is today Israel, Jews started buying a lot of land to farm. They hired a lot of Arabs to help out and paid them cash. Come tax time, the tenant farmer was able to decline the landlord’s loan offer.

The landlords tried various methods to preserve their power, such as a law banning land sales to Jews. Illegal sales continued, however, because Jews were paying huge premiums for apparently worthless land. Finally they played the “honour of Islam” card – that it was an insult to Islam for Dhimmis (i.e. Jews) to own Muslims (by virtue of owning Muslim land). That is the origin of the Arab-Israeli conflict, beginning more than two or three generations before the state of Israel came into existence – the unsettling effect of liberating Arab peasants from tax-currency profiteering Arab landlords.