What results in the money supply permanently increasing over the long term?

Question

So, from what I understand, some ways in which the central bank increases the money supply is through

• Open market operations/buying government bonds: But eventually the bonds mature, and the money is removed from the economy
• Lowering interest rates: This would encourage more lending from the banks and borrowing in the short term, but wouldn't raising them back up reverse the effects?

The money supply over the long term, for example between the 60s to now for the US, has clearly increased. How did this happen?

Answer 1

1. Part of the monetary base consist of notes and coins in circulation that come from mint or treasury. These increase at almost an exponential rate according to Fred data. This does not account for most of the increase but it is still part of the overall increase.

2. It is true that bonds eventually expire. However, Fed is buying constantly more of them. Fred data show that overall the Fed balance sheet tended to increase and expand. They do not publish historical data beyond 2007, but if they would be available you would see overall increase in balance sheet.

3. It is true that, ceteris paribus, increasing interest rate would reverse the monetary expansion caused by lowering the interest rate. However, over time there are also other forces at play. For example, average loan size depends, among other things, also in price level. Hence due to inflation the parameter(s) that determine the relationship between interest rate and quantity of money might change. Similarly to Fed, we can see from Fred data that the balance sheets of other banks tend to increase over time.

A combination of the above would explain the increase over time.