I was hoping to outline a few boring concepts that I nevertheless find notable, about world's economy, on the off-chance that recent economic events or own curiosity haven't lead you to hear about those things already. I find them of some interest and, assuming I didn't completely fail at the task of describing them, and that you have the patience to read a small wall of text, I think you will too.
Fractional Reserve refers to the practice of banks, when giving out loans, to keep a certain percent of their capital as "required reserve", where the rest of the capital is available to loan.
Fractional reserve is also, however, the implicit idea that the bank does not draw from its funds when offering said loan, but literally creates the required sum as bank credit and further that if and when said credit is deposited in the said bank, the new money is also available as basis for creation of loans. The interest is collected on all loans indiscriminately of whether they originated through this process or not.
For example: assuming fractional reserve requirements of 10%, a bank that initially has 100$ can lend out 90$. If this money is deposited back into it, it can now use the available 90$ to lend out 81$ more, and so on. Given enough time and re-deposits, the mathematical average of such practice in an active economy is that the sum of banks operating under the same system can loan out 10 times more money than they have in their vaults, while also collecting interest on the whole loaned sum.
Federal Reserve refers to government practice of money creation, where, upon need for creation of new money, the government exchanges treasury bonds that it produces itself for actual money produced by private banks which is legally treated as an act of loaning the money - the government promises to return the created capital, plus the interest on it, whether or not the end sum exceeds total money supply available at the end of operation.
Federal reserve is also an entity comprised of a number of selected private banks that are authorised to loan money to government in aforementioned process, usually regulated by a committee of bankers that oversee said banks themselves.
For example: the government wants to create 100$. It sends out a request to treasury to print 100$ in government bonds to treasury and then exchanges them for 100$ in real money, promising to return - assuming interest rate of 10% - 110$ at certain later date. Most likely the government will legally relegate paying the created debt and interest to taxpayers or foreign loans.
The consequences of either of those things are yours to imagine.
Now, the title and description refers to the system officially implemented in the US ("Federal Reserve"), but it is common, if not universal, throughout rest of the world ("Central Bank", "Federal Bank", "Government reserve", etc.) at the moment. You can try to specifically research state of affairs for your region, but chances are, it won't be easy. This is also the reason I can't give any sources or more detailed information, indeed you will only have my word for it that I'm not making this up.
Thank you for your attention.
Addendum:Inflation refers to increase in the total amount of money in circulation, and resulting increase in prices of goods.
An inflation rate of 2% implies that someone created 2% more money to go around, and it - after some time - will result in rise of prices of all things 2%, in a process of natural adjustment of the free market: because the amount of goods does not increase with creation of new money, the market will simply adjust to new size of money supply. Newly created money - inflation - will, so to speak, draw a share of value from other money that already exists. One important thing to note here is that this usually describes a trend, not a single-use static number, and not a total.
For example: assuming yearly inflation rate of 2% and tax rate of 50%, it would take inflation 50 years to overcome taxation in terms of loss of purchasing power for the taxpayer: 50 years of 2% inflation a year is 100% inflation total, now there's twice the money to go around, and so each coin is worth twice less.