Why investing in bonds imply a decrease in money demand?
One thing to consider is that, when the Federal Reserve in the United States tries to manipulate the money supply, it does so through either putting more of its money into the market through bond purchases (supplying banks with money to lend) or holding money from the market through bond sales (leaving the money essentially dormant). It is not so much that bond creators receive money when people turn to bonds with higher interest rates but rather that the bonds change hands to people (households, firms, banks) who would have actually circulated money in some way if they held it in liquid form. The missing link is the central bank's money holdings.