Question

Money is what Money does. Explain this statement.

Answer 1

Money is what money does. This definition of money, given by Walker, focuses primarily on the different functions of money which it performs. Money is generally defined as the medium of exchange which can be measured, stored, and used as a deferral payment standard.

It's not that money is intricate and multifarious and adaptable, and hard to identify with confidence, whereas money's functions are abstract and easy to identify, so anything we find fulfilling those functions has every right to be called money.

Since money is by definition the most widely accepted commodity, it is also the liquidest of all resources. Possession of money allows one to take hold of virtually any commodity anywhere and money never locks a buyer. This is this peculiarity that makes capital stand out from all other commodities. A liquidity choice is choice over capital. Money, therefore, acts as a common exchange medium, a common measure of value, a standard of deferred payments and a store of value.