Karl Smith claims

Money does not create anything. Value stored as money is value lost; lost because it represents resources not directed towards capital.

There is some truth to what he says, but this claim is false. It’s not that investing in money doesn’t actually cause an increase in capital available, it’s that it happens to invest in not very productive way.
As I’ve said before, I think it’s useful to think of central banks as private “producers of money” (who happen to have a monopoly and aren’t motivated primarily by profit). Think of the dollars as a product built and sold by the Fed. What does the Fed use to produce dollars? They use government bonds. They take them and use them to make their promise that dollars will maintain their value credible. This isn’t the only way money can be produced, other financial assets could be used, such as a basket of stocks. Because of this, investing in money is effectively the same as investing in whatever asset the central bank uses to produce its money (albeit at a worse interest rate).
Assuming the Fed approximately expands the dollar supply when demand to hold dollars goes up (and vice versa), an increase in demand to hold money means the Fed buys whatever asset they use to produce money. This causes an increase in the demand for that asset. You might not think that an increase in demand for government bonds causes good investment on the margin, but it’s also not wasted completely. How much waste depends on: 1) the government bond supply curve 2) the elasticity of demand between government bonds and other assets 3)  how good the government is at doing productive investments relative to private investment.

That said, it’s conceptually easy to make money a poor store of value: give it a large negative interest rate. This is necessary when the asset used to produce money (normally government bonds) have a low or negative interest rate in order to avoid having the central bank subsidize people’s holding of money.

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