So, it doesn’t matter if money is endogenous. Shedlock’s critique merely asserts that money is endogenous and that this is somehow a fatal blow to Austrians and their views on banking, inflation, and business cycles. But it’s not. If money is primarily generated within the banking system, it still results in unsound banks, price inflation, and business cycles. If the supply of money is primarily determined by central bank policy, the same applies. In the real world, both private banks and the central bank exert influence over the total stock of money and interest rates, though I would add that the banking system’s ability to engage in fractional reserve banking and expand credit is enabled by the central bank and the government. A free banking system would be constrained in its ability to expand credit due to bank competition.

Yes, they both do it together because the banks own the fed and the fed determines the policy on reserves. Fractional reserves are the cause for the increase in money supply. Can everybody else live with this situation?