Sounds incorrect, so long as cash is stored in a bank then its part of the fractional reserve system and lent out on many multiples into the economy.   Hence there no contraction from people making sure they have enough money to pay the bills next week, month or even a year forward because that cash is on a company balance sheet and being used.
  Taking cash out as notes and holding it physically I guess would have more of an effect possibly, or the idea of holding gold over FIAT but the whole deal is flawed from the concept of constant inflation to aggitate growth via monetary velocity.   Its modern economics maybe but its based off constant debt which will collapse eventually.