A different view is that the magnitude of the money supply is determined not by the Federal Reserve but by the decisions of the public and the banks. In this view banks supply only as much in deposits as the public wants to hold. Additional reserves cannot lead to an increase in the supply of deposits if the public does not want them. People will simply repay loans and shrink the money supply. According to this view a decline in the money supply is a response to a decline in people's demand to hold it, not an independent action by suppliers to reduce the quantity of money.
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