The Nature and Creation of Money

Key Takeaways

• Money is anything that serves as a medium of exchange. Other functions of money are to serve as a unit of account and as a store of value.
• Money may or may not have intrinsic value. Commodity money has intrinsic value because it has other uses besides being a medium of exchange. Fiat money serves only as a medium of exchange, because its use as such is authorized by the government; it has no intrinsic value.
• The Fed reports several different measures of money, including M1 and M2.