This is kind of an economics question, and my answer may be controversial. However I'll try to stick to the undergraduate academic view of economic history and monetary policy and not advance personal views.

Like other tradeable goods, Money has a supply and a demand. The Money supply is all the money available to an economy. The money demand is basically all the people who need a means of exchange to complete their economic transactions, or save for a later transaction, or do any economic activity. It seems crazy to talk about the price of money, but you can imagine that if every bank account doubled overnight prices of goods would also double pretty quickly as people bid up the prices of goods.

A growing economy generally demands more money. People are making more transactions, making plans to invest in business and they need more currency to keep track of everything they are doing. If there is just not enough money to keep transactions flowing, the economy will not grow. If money were suddenly withdrawn from an economy, transactions and economic activity that would ordinarily happen will stop.

The history of monetary policy is closely tied to banking. The reason for this is the effect of lending on the money supply. When a loan is made the lender has the debt on his books as an asset, and the borrower has the cash on his books (or in his mental equivalent) as an asset. Both borrower and lender will act as if they had that money to spend. This means that just the mere act of lending money tends to increase the supply of money in practice. When a lender calls in a debt, or it is paid and he does not lend the money again, the money supply contracts. If all the lenders in the economy called in their debts at once, the money supply would sharply contract and the economy would sharply contract as nobody was able to transact because there isn't enough money. This can actually have a feedback loop effect because if the supply of money is shrinking, the money itself becomes more valuable, and it makes sense to hold it and not to lend it.

In the late 19th and first few decades of the 20th century, banking became widespread and the gradual expansion and then sharp contraction of lending became a normal part of the economy. As a result very fast booms and sharp busts were the normal condition of the entire American economy, not merely the banking sector, from 1865-1929. Despite the relatively inflexible Gold Standard used at the time, the money supply was hugely variable and growth, sharp inflation and staggering deflation were normal facts of life.

In the 1930s thru the 1970s the unchecked, unmanaged process of the financial sector to expand and contract the money supply were brought under government control. When the money supply looked tight, governments had various levers they could pull to try and keep the money supply within a stable, predictable range. Eventually, the smoothest way to manage the money supply became seen to be fiat currency, with the government directly controlling how much money was in the economy at one time and the gold standard became at first notional, and then entirely discarded. In the U.S. this is the federal reserve system, but other countries have different ways for governments to manage the value of the currency.

The system of fiat currency has been relatively successful in controlling the price of money. Inflation rates in the U.S. have been stable from 1930-2014 with only brief periods of double digit inflation in the late 70s and no periods of deflation (historically by far the more serious issue because of it's effect on economic activity) at all in the last 70 years or so. A slow and steady inflation (1-6%) has been annoying to people who hold a lot of cash, but it's seen as the lesser of the two evils to the majority of economic policymakers.