You're forgetting that the government doesn't _control_ the whole money supply. The government only controls how much it itself creates or deletes on net.
Most money is created by commercial banks. As the demand for credit expands the money supply expands, and as credit is repaid, the money supply decreases. This is going on all the time.
Most money is created by commercial banks. As the demand for credit expands the money supply expands, and as credit is repaid, the money supply decreases. This is going on all the time.