Why inflation?

 CPI rises seemingly continuously. Consumer debt is erratic. Consumer debt levels are mostly determined by housing market. Housing is generally short in supply due to inter state and international migration and zoning. But debt and interest should eventually hedge the shortage, and keep housing prices stable.  

When prices consistently rising then supply/demand balances are getting worse.

This chart is housing inventory. it is consistently erratic and getting worse. The cause is people increasingly moving in response to macro economic conditions, mainly volatile energy prices and volatile public sectors.

The exit was from the cities when energy prices peaked in 2008, then as the fracking industry began there was substantial movement of labor to oil states.  Now we have another migration from the cities. 

Price inflation is increasing instability in supply/demand.  The migrations and regional stress cause regional parties to exchange power in the Swamp exacerbating the instability.

It has now become deflation as the Fed intervenes with taxes that depress the migrations. Folks can no longer afford the transaction coasts of all this moving around. There is a connection between high oil costs and house prices as house construction  uses. Consumers spend about $3100 on energy with a mean ncme of about 60k, or about 5%.  Home construction requires abut 5-10%, but the total embedded energy cost is about 20%. So a doubling of energy costs, by itself, cause a price rise of 20%, all else being equal.

So, as an agent of the federal government,, Powell is correct for increasing our taxes to dampen instability.  But it is the wrong tool and he knows it. The stimulus he wants from the Swamp is a stimulus that reduces the increasing instability, and that is revenue sharing. Politicians like to hide in earmarks sharing, but that fraud has run its course and time to fess up and utilize Uncle Sam's cash.