Banks may lend up to $4.60 per every dollar in deposits (fractional lending): http://en.wikipedia.org/wiki/Fractional-reserve_banking#Money_creation Thus the main source of dollars are the banks, not the Fed? Banks caused the dollar decline by lending like mad, specially during the subprime bubble?
Banks don't print money. They distribute it to the masses on leverage, as you pointed out. Without the Fed (a private for-profit corporation, not part of the government, and cannot be overruled by the government), the banks have no new cash and noplace to make deposits of their own.