Here is the passage I'm having trouble with:
"When the bank discounts a bill or grants a loan in some other way, it exchanges a present good for a future good. since the issuer creates the present good that it surrenders in the exchange -- the fiduciary media -- practically out of nothing, it would only be possible to speak of a natural limitation on the quantity of fiduciary media if the quantity of future goods that are exchanged in the loan market against present goods was limited to a fixed amount. But this is by no means the case. The quantity of future goods is indeed limited by external circumstances, but not that of the future goods that are offered on the market in the form of money. The issuers of the fiduciary media are able to induce an extension of the demand for them by reducing the interest demanded to a rate below the natural rate of interest, that is below that rate of interest that would be established by supply and demand if the real capital were lent in natura without the mediation of money, whereas on the other hand the demand for fiduciary media would be bound to cease entirely as soon as the rate asked by the bank was raised above the natural rate."
1. What does it mean to say that a "bank discounts a bill" and why is this a "fiduciary media" similar to making a loan?
2. What does it mean to say that future goods are offered on the market in the form of money?
3. How does the reduction of interest demanded "induce an extension of the demand for them [i.e. the future goods]?
Thanks