Return to Answer

Actually, the expression more money supply is not clarifying at all (i) which effect is desired abd (ii) what really occurs, whence your (really natural) question.

What is implicit behind this expression is that commercial banks will have an easier access to (re-)financing. If commercial banks play their role of Money multiplier -- which is not that obvious since they may prefer to clean their balance sheets --, they will basically be more prompt to grant credits. Put differently and using an abusive but pedagogical term: they will be psychologically more prompt to waste money, and thus to stimulate demands here and there.

Since growth is very often conceived as being demand led, more demands (of goods or whatever) at a constant level of supply (of those goods or whatever) in turn means inflation, until levels of supply, here and there, adjust and create jobs, generate dividends, etc...

To conclude and summarize

Basic Reason of Why the Money Supply Needs to Increase?

Because one needs commercial banks to be more relax and play their role.

what would be wrong with keeping it the same as the economy grows [...]

The economy cannot really grows without leverage.

[...] or contracts

Bubbles may form and explode sooner or later in this case, which is nothing desirable.

Adjusting the money supply is a difficult balancing exercise for central banks.

Actually, the expression more money supply is not clarifying at all (i) which effect is desired and (ii) what really occurs, whence your (really natural) question.

What is implicit behind this expression is that commercial banks will have an easier access to (re-)financing. If commercial banks play their role of Money multiplier -- which is not that obvious since they may prefer to clean their balance sheets --, they will basically be more prompt to grant credits. Put differently and using an abusive but pedagogical term: they will be psychologically more prompt to waste money, and thus to stimulate demands here and there.

Since growth is very often conceived as being demand led, more demands (of goods or whatever) at a constant level of supply (of those goods or whatever) in turn means inflation, until levels of supply, here and there, adjust and create jobs, generate dividends, etc...

To conclude and summarize

Basic Reason of Why the Money Supply Needs to Increase?

Because one needs commercial banks to be more relax and play their role.

what would be wrong with keeping it the same as the economy grows [...]

The economy cannot really grows without leverage.

[...] or contracts

Bubbles may form and explode sooner or later in this case, which is nothing desirable.

Adjusting the money supply is a difficult balancing exercise for central banks.

Actually, the expression more money supply is not clarifying at all (i) which effect is desired abd (ii) what really occurs, whence your (really natural) question.

What is implicit behind this expression is that commercial banks will have an easier access to (re-)financing. If commercial banks play their role of Money multiplier -- which is not that obvious since they may prefer to clean their balance sheets --, they will basically be more prompt to grant credits. Put differently and using an abusive but pedagogical term: they will be psychologically more prompt to waste money, and thus to stimulate demands here and there.

Since growth is very often conceived as being demand led, more demands (of goods or whatever) at a constant level of supply (of those goods or whatever) in turn means inflation, until levels of supply, here and there, adjust and create jobs, generate dividends, etc...

To conclude and summarize

Basic Reason of Why the Money Supply Needs to Increase?

Because one needs commercial banks to be more relax and play their role.

what would be wrong with keeping it the same as the economy grows [...]

The economy cannot really grows without leverage.

[...] or contracts

Bubbles may form and explode sooner or later in this case, which is nothing desirable.

Adjusting the money supply is a difficult balancing exercise for central banks.

Incidentally, I worked in the refinancing department of a french commercial bank.

Actually, the expression more money supply is not clarifying at all (i) which effect is desired abd (ii) what really occurs, whence your (really natural) question.

What is implicit behind this expression is that commercial banks will have an easier access to (re-)financing. If commercial banks play their role of Money multiplier -- which is not that obvious since they may prefer to clean their balance sheets --, they will basically be more prompt to grant credits. Put differently and using an abusive but pedagogical term: they will be psychologically more prompt to waste money, and thus to stimulate demands here and there.

Since growth is very often conceived as being demand led, more demands (of goods or whatever) at a constant level of supply (of those goods or whatever) in turn means inflation, until levels of supply, here and there, adjust and create jobs, generate dividends, etc...

To conclude and summarize

Basic Reason of Why the Money Supply Needs to Increase?

Because one needs commercial banks to be more relax and play their role.

what would be wrong with keeping it the same as the economy grows [...]

The economy cannot really grows without leverage.

[...] or contracts

Bubbles may form and explode sooner or later in this case, which is nothing desirable.

Adjusting the money supply is a difficult balancing exercise for central banks.

Actually, the expression more money supply is not clarifying at all which effect is desired, whence your (really natural) question.

What is implicit behind this expression is that commercial banks will have an easier access to (re-)financing. If commercial banks play their role of Money multiplier -- which is not that obvious since they may prefer to clean their balance sheets --, they will basically be more prompt to grant credits. Put differently and using an abusive but pedagogical term: they will be psychologically more prompt to waste money, and thus to stimulate demands here and there.

Since growth is very often conceived as being demand led, more demands (of goods or whatever) at a constant level of supply (of those goods or whatever) in turn means inflation, until levels of supply, here and there, adjust and create jobs, generate dividends, etc...

To conclude and summarize

Basic Reason of Why the Money Supply Needs to Increase?

Because one needs commercial banks to be more relax and play their role.

what would be wrong with keeping it the same as the economy grows [...]

The economy cannot really grows without leverage.

[...] or contracts

Bubbles may form and explode sooner or later in this case, which is nothing desirable.

Adjusting the money supply is a difficult balancing exercise for central banks.

Actually, the expression more money supply is not clarifying at all (i) which effect is desired abd (ii) what really occurs, whence your (really natural) question.

What is implicit behind this expression is that commercial banks will have an easier access to (re-)financing. If commercial banks play their role of Money multiplier -- which is not that obvious since they may prefer to clean their balance sheets --, they will basically be more prompt to grant credits. Put differently and using an abusive but pedagogical term: they will be psychologically more prompt to waste money, and thus to stimulate demands here and there.

Since growth is very often conceived as being demand led, more demands (of goods or whatever) at a constant level of supply (of those goods or whatever) in turn means inflation, until levels of supply, here and there, adjust and create jobs, generate dividends, etc...

To conclude and summarize

Basic Reason of Why the Money Supply Needs to Increase?

Because one needs commercial banks to be more relax and play their role.

what would be wrong with keeping it the same as the economy grows [...]

The economy cannot really grows without leverage.

[...] or contracts

Bubbles may form and explode sooner or later in this case, which is nothing desirable.

Adjusting the money supply is a difficult balancing exercise for central banks.

Incidentally, I worked in the refinancing department of a french commercial bank.