That's exactly the point. The notes in circulation have lost most of their value. Every dollar the Fed creates causes those already in circulation to be devalued.
The point is the economy (and the need for money) has grown much faster than the supply of silver and gold has grown. Even when we were on a gold standard the shortage of gold was constantly causing panics, recessions and depressions.
Every dollar the Fed creates causes those already in circulation to be devalued.
Wrong. And in case you didn't know, the Fed only creates a small portion of the new money supply every year.
If that were true then every time the money supply increased we'd have inflation. It doesn't. In fact, if the increase in wealth is faster than the increase in in money, we can have deflation. Inflation only happens when the money supply grows faster than wealth.