Without the Federal Reserve, government deposit insurance and other regulations the reserve ratio set by the market would probably be very high (perhaps though not 100%). This would probably be the case if fractional reserve banking was legal.
But there’s a great debate among Austrians if FRB should also be legally prohibited because it can be considered fraudulent and an infringement of property rights. If it were illegal, a 100% reserve ratio would be required.
(A bank following a 100% reserve ratio, would not be able to create money out of thin air and thus increase the money supply.
I’m sure you can find articles on this topic on mises.org
I’ve never heard of endogenous money and I’ve read lots of Austrian literature. The Wikipedia Article on endogenous money states that the concept was explained by Irving Sisher, a neo-classical economist, not an Austrian.
I’m not sure about the second part of your questions. It seems to me you’re confusing the scenario in the example with fractional reserve banking. (I’m also not sure if a store would accept the ‘credit money’.)
In the case of FRB, if I deposit $500 in a bank and the reserve requirement ratio is 20%, then the bank can loan out additional $400 (80% of $500). I would be able to withdraw the $500 from my checking account. The receiver of the $400 credit loan is of course also able to spend that money. So the money supply has increased from $500 to $900. If the loan is payed back, the money supply shrinks back to $500.
I hope I could help a little bit