The Federal Reserve is not lending dollars to...
that are regulated and supervised in the United States
against U.S. dollar collateral.
The Fed has been forced
...to lend dollars on an unsecured and unlimited basis
to foreign central banks against foreign currency collateral
-- and without any explicit Congressional approval.
If the euro collapses,
this kind of action would expose the Fed to collateral losses
that would force the Fed to print lots of money,
creating the kind of serious inflation
that leads to debt distress and triggers debt deflation.
If a nation prints more money,
like cutting a large pizza into 16 slices instead of 8,
is each slice worth less?
What if the pizza shrinks while the number of slices rise?
When national debts
have once been accumulated to a certain degree,
[there has never been] a single instance
of their having been fairly and completely paid.
The liberation of the public revenue
...has always been brought about by bankruptcy,
though frequently by a pretended payment [through inflation].
Moral philosopher and Father of Modern Economics