re: Why so much talk of raising minimum wage? Why no discussion on cost of living?

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So if I am understanding you correctly, inflation actually can be reversed, and at will, by the Fed.

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Absolutely.

Let's play hypothetical.

Say the Federal Reserve raises the Fed's Fund Rate to 10% tomorrow. What do you think would happen to the market? Borrowing and liquidity would come to a screeching halt (actually significantly slow down). (And for this hypothetical lets go with home prices.)

That means for a $100,000 mortgage today at 5% would run you ~$540/month and tomorrow after the Fed raise the rate to 10% a $100,000 mortgage tomorrow at 15% (likely rate at 10% Fed's Fund Rate) would run you ~1,264/month. You could get A LOT more house today than you could tomorrow.

That kind of move would put major pressure on real estate to LOWER prices to meet demand (or lack of). Lower prices = deflation.

Okay that was an extreme example but the purpose was to demonstrate how the Fed could cause deflation.

But let's get back to real life. For the first time I believe, since 1913 the Federal Reserve does not have the ability to lower rates. We are essentially at zero. Despite being at zero the economy has failed to respond like previous rate lowerings. These are new times. I don't know where the Fed goes from here in an attempt to stimulate the economy. The only way I see out is for the economy to produce enough value to clear out the malinvestment from previous years.