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"Rothbard estimates that the Federal Reserve expanded the money supply by 60% from mid 1921 through mid 1929."

That works out to an annual increase of 6%, which is fairly modest.

Also, it's hard to tell which is cause and effect between money supply and economic activity. For example, inceased economic activity generates more money and is reflected in an increased money supply.

Money loaned out by the fed has market-rational risk removed from it since it is "gauranteed" by the power of taxation. If a bank loans out its own money, it has its own solvency at stake not to mention the limitation of its own available funds. This greatly restricts the availability of money for loans compared to what is available with the fed res system. If a bank loans out the fed's money it would have to be altruistic to decide that the fed's policy is too loose and is putting the taxpayers at risk.

"For example, inceased economic activity generates more money and is
reflected in an increased money supply."

What, does economic activity produce some type of transmogrification I haven't heard of? The only thing that increases money supply (at the present) is the expansion of debt.

Real money (or "tangible" wealth) is created by production of goods and products which are purchased with another portable, fungible product which is also produced (like gold or silver).

If current money were "real" it would expand in lockstep with general production and be based on a definable portable commodity. Prices would rise or fall based solely on a products desirability or quantity.

Right now we've seen the money supply expand by about 15% since the beginning of the year, but the economy sure didn't expand that much and the base that that money resides upon (confidence in debt) is starting to get a little teetery...

That might be a little simplistic, but its how I see it.