Thank you for the reply. I don't believe I took the quote out of context, as I wrote what Friedman said, almost verbatim without commentary. The monetary base is the stuff consumers touch because -- literally -- if you're touching it, then it is monetary base (cash, etc).

> there is no fractional reserve banking in Bitcoins (or at least I'm not clear how you'd build fractional reserve banking on top of Bitcoins).

Fractional reserve banking with bitcoins works exactly the same as it does with anything else (modern USD, USD 110 years ago [gold-backed], etc.)

Friedman explicitly says, keep the amount of currency constant, and use fractional reserve to increase the amount of monetary supply, as needed for expansion. We can do exactly this with bitcoin. Do you disagree?