Could Someone Please Explain the Money Supply?

[Mempho]

How is our currency created (not physically)? In all of the discussion on economics, I have not yet seen anyone clearly explain how our money supply works. A few things I do know is that:

1) Our currency is not backed by anything; it's just paper
2) Is inflation a byproduct of printing too much money?
3) The Federal Reserve controls a lot of this process

Do we:

1) Consistently print more money than we destroy (on a federal level)
2) If so, who gets the benefit of this extra money printed?
3) How do we keep track of the amount of digital money since most money now is not kept in hard currency?
4) How do we find out how much money was created, either through printing or other creation, in the past year? Further, how do we know how much has been destroyed?
5) Why is our money not backed by something of value? Why did we decide to get off gold and silver standards? Doesn't this make more sense?
6) What is it that is currently backing our currency?

I feel completely ignorant as an American citizen as I know none of this. It really struck me because last night because I went to sleep watching CSPAN coverage of Bernake's testimony. Paul's opening comments were disturbing...every fiat currency system in history is failed. Why is he wrong? If he's not, why is this not a major political issue. I'm not trying to push Paul in 2008, I just really figured out that I have no idea what I'm talking about when I talk about economics, which is sad because I have a post-graduate degree from a business school.