Initially we defined the money supply as the total amount of currency held by the public

Initially we defined the money supply as the total amount of currency held by the public

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Initially we defined the money supply as the total amount of currency held by the public.  While this definition is correct, it is incomplete. In the previous section, we learned that  through a fractional reserve banking system, the money supply increases. Thus, the  money supply is better defined as the total amount of currency plus deposits held by the  public. All available money, either in terms of currency or demand deposits, is thus  accounted for.  Initially, money supply was introduced as a vertical line that was only affected by Fed  policies. While it is true that the Fed has the majority of the control over the money  supply, our new definition of money supply indicates that the public has so me control as  well, albeit unwitting: the public has the power to make deposits and take out loans. We 
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