I wanted to say something about how the existence of a bank intermediary relates to the idea of loanable funds, as I often see it suggested that the ability of banks to create money is what removes the loanable funds constraint.
Consider an economy with only two private agents - Patient and Impatient. Impatient always spends all his income plus anything he can borrow. There is also a government which occasionally spends and occasionally taxes. Any difference it funds by printing money. Right now it is spending, but not taxing, so it is increasing the supply of money.
Patient has three possible uses for his income:
1. Consumption spending
2. Making loans to Impatient
3. Increasing his holding of money
The total of these three must equal his income. He therefore has two and only two independent choices. What happens in the economy depends critically on these choices. Aggregate spending will increase if he increases either consumption spending or loans to Impatient (the latter because, by assumption, Impatient will immediately spend the amount loaned). The only choice that will reduce aggregate spending is one that involves trying to increase his holding of money.
Making loans funds Impatient and accumulating money funds the government. However, a decision to lend to Impatient dictates Impatient's spending; a decision to accumulate money has no impact on the government's spending.
Patient's two choices are independent. It might be that Patient decides that if he makes a loan to Impatient he will cut his own spending by an equivalent amount. In that case, lending to Impatient would have no impact on aggregate demand. We would have what looked like a loanable funds model.
However, there is no reason Patient has to behave this way. He could equally decide to fund a loan to Impatient by reducing his holding of money. In that case, the increased lending would lead to greater aggregate expenditure.
So greater debt can lead to greater aggregate demand, but it depends on the various choices made by the lender. This has nothing to do with the endogeneity or otherwise of money. So how might banks and financial intermediaries matter here?
Let's now suppose that the government's money and the loans to Impatient are held by a bank and all Patient holds is bank deposits. Now Patient only has one choice to make - whether to spend or accumulate bank deposits. The other decision - how much to lend to Impatient - is now taken by the bank. So, whereas before there might possibly have been some connection between how much Patient spent and how much was loaned to Impatient, there are now likely to be unrelated. Intermediation splits the decision taking.
Financial intermediation (or "endogenous money" or whatever) is not at all necessary for the loanable funds constraint not to apply. What it does do is distance saving and lending decisions, making it less likely that the two are correlated.