Creating Money

          Since money is something that is accepted as payment for goods, services, and depts, its value lies in its purchasing power. Money is the most generalized claim to wealth, since it can be exchanged for almost anything else. Most transactions in today's economy involve money, and most would not take place if money were not available.
          One of the most significant functions of the monetary system within the financial system is creating money, which serves as a medium of exchange. In the United States, the Federal Reserve System is primarily responsible for the amount of money that is created, although most of the money is actually created by depository institutions. A sufficient amount of money is essential for economic activity to take place at an efficient rate. Too little money constrains economic growth. Too much money often results in increases in the prices of goods and services.