Dinosaur Derivatives and Other Trades

2 What is Uncertainty?Joseph's Dreams

“For I dipt into the future, far as human eye could see,

Saw the Vision of the world, and all the wonder that would be;

Saw the heavens fill with commerce, argosies of magic sails,

Pilots of the purple twilight, dropping down with costly bales…”

—Locksley Hall by Tennyson, (1809–1892)

“It is certain because it is impossible.”

—Tertullian (c. 160 CE–c. 225 CE)

There is one story in the Old Testament that is of a uniquely economic nature. It is the saga of Joseph, his prophetic dreams, and the seven good years and seven bad years.

You may be familiar with these chapters from the Book of Genesis, but let's summarize the overall story. In so doing, I am not trying to teach a religious lesson, nor am I opining on the veracity of the story. The element that intrigues me most is the story's financial meaning. This is a drama which brings out, in the most striking fashion, some antique issues of finance and philosophical uncertainty.

Let's review the situation as it stood in ancient days. Joseph was the second youngest son of Jacob. From an early age Joseph showed precocious talents that triggered the jealousy of Joseph's many brothers. His gifts were so abundant that he was favored by his father, who gave him a particularly fancy (and brightly ...