Part 2/11:
Money exists primarily to make trading easier. Picture trying to barter eggs for a cow or a house for eggs—complex and inefficient. Money acts as a common intermediary, simplifying exchanges by providing a standard measure of value. However, money isn’t just physical objects like coins or bills; it’s part of a larger system called a monetary system, which includes banks, central authorities like the Federal Reserve, governments, and taxes.
The Nature of a Monetary System
Think of a monetary system as a giant spreadsheet that tracks two key things:
Who owns what money
The total amount of money in circulation