why is money so important when it is just paper that can be printed?

Question

why is money so important when it is just paper that can be printed?

In: Economics

Answer 1

I have a cow farm. You have a cotton farm. Jane sells wine.

You want a cow. I want wine. Jane wants cotton.

We can either all set up a bunch of different cow-to-wine, cotton-to-wine, wine-to-cow exchange rates. Or we can peg all of them to a specific unit, like a dollar.

Now you don’t need to worry about complex cotton-to-wine-to-cow transactions, you also don’t need to take a bunch of wine and hope that I will want it when you go to buy a cow.