They have looked around at the monetary technologies available to them, and decided that this was the best one: stacks of paper claims issued by the global hegemon that they're not particularly fond of, stored in their own home rather than trust the banks. What a sad state of affairs.
They put as much of their illiquid net worth as possible into buying a condo, and the rest of their liquid net worth goes into paper dollars with no interest. So, for starters, they have to sacrifice liquidity for savings.
Egypt is not a very tech-savvy market; bitcoin, stablecoins, and other similar tech are all on the fringes. Many Muslims believe that bitcoin is speculation and thus bad, and so I appreciate the work that Saifedean and others do to show that no, bitcoin is interest-free sound money and good. If anything it's fiat money that doesn't conform to Muslim ideals. But more importantly, most Egyptians haven't actually spent time to understand the tech, unlike Nigeria or other countries. It's just not a "thing" there yet.
The only time I encountered someone in person who had not yet heard of bitcoin, was in Egypt. I was speaking to a friend, and we were talking about the Iranian protests; she was happy that many women had taken off their head coverings if they wanted to (she herself was someone who did so in Egypt, where it's permissible). I was like, "yeah, but it's rough for them. They risk getting bank accounts shut off. That's why some of them have promoted bitcoin. but I think it's still way too small yet."
And she was like, "what's bitcoin?"
And I was surprised. Many people haven't understood bitcoin, but most have heard the name. She hadn't heard the name even in 2022.
What we have today is clearly a local maximum. This is clearly not the height of monetary technology.
quotingWhen money inflates in supply, employers have the benefit of the status quo, and wage earners have the burden of work to negotiate higher nominal wages to keep up.
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The effect is subtle in developing countries, a few percentage points per year, but it's always there behind the scenes. People often have to switch jobs to get proper higher wages, and avoid the anchoring bias from their prior employer. This is all because of dilutive fiat money.
The problem becomes more obvious in developing countries.
For example, the IMF tells Egypt to cut its currency in half relative to the dollar, if it wants some loan relief. It does. Now, every Egyptian wage earner has to try to negotiate a raise to regain some portion of their prior wages in terms of global purchasing power. Virtually all of them will not be able to. And then seven years later they do it again.
But when money deflates in supply, and the unit of account therefore appreciates, wage earners gain the benefit of the status quo in negotiations. If their salaries merely remain the same as averages prices go down, they have gained a raise (which makes sense, with greater experience).
The burden of work shifts to the employer, who has to argue that wages should be cut in line with prices.
I think the magnitude of this effect is poorly understood. If it were more understood, I think a subset of labor-oriented political proponents would appreciate hard money a bit more.