This gives the impression that money is the means of sustenance that sustains economic activity. However, money's main function is to fulfill the role of a medium of exchange. Money itself does not sustain economic activity, rather production, saving, and capital investment.

Historically, many different goods have been used as the medium of exchange. On this, Mises observed that, over time,

…there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money.

Through the ongoing process of selection, individuals settled on gold as their preferred medium of exchange. Many economists—while accepting this historical evolution—cast doubt that gold can fulfill the role of money in the modern world. Many believe, relative to the growing demand for money because of growing economies, the supply of gold is not adequate. Some commentators are of the view that the lack of a flexible mechanism that coordinates the supply versus the demand for money is the major reason why the gold standard leads to instability. In other words, the supply of gold is not growing fast enough. This, in turn, runs the risk of destabilizing the economy. Hence, most economists—even those who express sympathy towards the idea of a free market—endorse the view that the government must control the money supply. According to Larry Elkin,

The basic problem is that the supply of gold is not related to the quantity of goods and services being produced…. As a result of this scarcity, prices decline. Individuals have less incentive to produce new goods and services. Economic growth is stifled. Allowing money to become scarce does the greatest harm to those who have the least. In the past, the relative inflexibility of the monetary system contributed to the chronic lack of growth in many of the world's less developed countries. Since the 1970s, we have had one of the most flexible monetary systems the world has known, and many of these countries have flourished. With a flexible monetary system, more money can be created to accommodate more growth.