Isn't money just a medium of exchange...used to convert one type of good into another?I'm tempted to answer "no". Money has properties -- the very ones that prompted its design -- that make an exchange of money quite different from an exchange of goods or services.
The important property for this discussion is: an exchange of services doesn't offer you a reliable medium of savings. If I offer to shingle your house in exchange for you shoveling my snow, but it's January and I can't shingle the house until May, we're stuck. You can shovel the snow first and have me owe you the shingling, but what if I flee the state, or injure myself? Or what if May comes around and you have decided that you'd rather have the lawn redone than the shingles replaced? I don't know lawns! I only do shingles!
But money solves this problem because you can put it in the bank (or a piggy bank, for that matter) and decide later what to trade it for and with whom.
Which leads directly to the problem we're worried about: deflation. Right now is a very bad time to hire someone to reshingle my house for $75 an hour, because in six months another 3-5 million people will be out of work and there will be a lot more unemployed people with building skills, some of whom might be willing to reshingle my house for $50 an hour. But, of course, at that point I might be out of work myself, and $50 might seem like a lot of money, but no problem, because if I wait another six months the price might be down to $25 an hour...
In a depression people hoard their money, because there isn't a lot coming in and because it's worth more the longer you wait. That's the phenomenon which Keynesian stimulus seeks to prevent. You have to offer folks $50 an hour (or whatever) to do anything -- twiddle their thumbs, if necessary -- to keep money flowing into and through the system and to fight the universal tendency toward deflationary deadlock: The situation where everyone sits on their cash and their labor, waiting.
(Since the 1930s, we've prevented our economy from falling into this terrible state by using monetary policy. But you can't use monetary policy to maintain equilibrium once the real interest rate is zero. Which it apparently now is.)
Unfortunately, a depression is one of those nonlinear, non-equilibrium, black-swan situations that relatively few living Americans have experienced, and we're seeing the very real danger that people will refuse to recognize the possibility this time until it's too late. You have to anticipate these things, because economies have a lot of momentum.