Banks loan money they don't have. Most hold a limited reserve to serve the few who decide to make redraws. When the majority decides to liquidate their bank accounts we have what is called a bank run.

In order to protect the banks, central banks were created to provide a guaranteed reserve for commercial banks. But once the government stepped in to protect the banks the fractional reserve mandates(only a fraction of deposits are backed by actual cash) began to be used to make up the money from thin air. Every dollar that a bank holds can be multiplied by at least 10x.  

We can measure the supply of money that exists in the market with main metrics:

• M1 money supply includes liquid money aka cash. 
• M2 (which includes M1) includes loans, deposits & market funds. This is mainly made up money. 

As the chart shows the US (and all other countries with central banks) have most of the monetary mass made up. An influx of money causes inflation and this is exactly what during the last decades.