This chapter begins to discuss the true definition of money and its actual importance in the financial system today. This chapter explains that money is essentially what helps us efficiently exchange items of variable values. Opposed to just assuming what's of equal trade value for everything, it is stated that money helps establish a measurement so that everyone is getting a fair trade. It also talks about how rare it is for two specific traders to want what the other has to offer. To avoid searching for items that hold equal importance, it's best that currency exists. This was a pretty simple concept, because this is stuff that I have witnessed. Despite not having though of it to this extent, I think that this only helped my understanding of the purpose of money.
The second part of the chapter talks about money's cycle through institutions such as banks and Federal Reserve Banks. I found this to be interesting as, I never quite realized that banks relied on another "intermediary" when providing money. I found all of that dandy, however struggled to understand the money multiplier and fractional reserve banking stuff. Hopefully that is explained in great detail in class, so that I will be solid for the next test.
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