"Even if you’ve put your own money into stocks and bonds, that money is still in bank deposit accounts: it’s just in the bank deposit accounts of stockbrokers and pension funds, rather than your own."
Bank deposits are fed debt and deficit (new money). The federal gov "prints" money with the deficit. Taxes take money out of circulation.
Deficit and taxes, not interest, control the money supply.
"Mankiw claims that a government deficit moves the savings curve to the left: it reduces Deposits. A government Deficit is the difference between government spending and taxation, and both spending and taxation operate through bank deposit accounts. Government spending increases bank deposit balances; taxation reduces them."
"So, what happens when the government runs a deficit; what happens when government spending exceeds government taxation? Bank deposits rise: a deficit doesn’t reduce the stock of savings, it increases them."