Not quite, it's not permanently locked, I have just decided not to spend it. Ditto money people squirrel away in mattresses or vaults. It is an analogy for a change in behavior of market participants over time which must by necessity be included in any complete model of an economic and monetary system. Broadly speaking, "velocity."

This system remains at equilibrium because supply went up, and velocity went down leading to neutral price action.

It analogizes this graph: https://fred.stlouisfed.org/series/PSAVERT