However, tying up real saving in real investment is extremely risky. Any capital formation that does occur generally comes from the owner. Because saving must precede investment, the whole process is tedious and time-consuming. The borrowing and lending process is extremely cumbersome. As a result, growth and development occur at an extremely slow rate.
Money is a generalized claim on all other assets.
Buyers must always have money to exchange for the seller's real assets. The Equation of Exchange shows the relationship between money, its velocity, and the things that are being bought. Money improves upon the barter production economy. Money establishes a uniform set of prices . Prices are measured in absolute terms and people have only to compare the absolute prices to determine value.