First, we shouldn't
have price "stability" as defined by the Fed. In a technological economy, the price of everything
should be trending downward - price optimization is exactly what a market does! The Fed functions to smooth out the bumps, but they seem unable to do so without being tempted to destroy that natural downward trend. Which is why we're next door to 0% interest and "Helicopter Ben" is making rounds in academia (UBI).
The core of your argument seems to be that there is little economic difference between natural technological deflation and forcing a slow inflation, that the market can adjust to either condition. But if markets were perfectly efficient like this, then forcing inflation would have no effect and in fact bubbles would not occur because they would be immediately corrected
Real markets have inefficiencies and lag time, and altering the macro environment is straight endorsement of specific policy, but cloaked as science. If prices were allowed to go down and people were able to save money (actual savings, not simply leveraged between stocks and debt), then they could choose to work less and we would be able to actually see widespread gains from technology. Instead, the government is running the same tired Keynesian playbook for getting "full employment" while the need for human work is being ever reduced.
> You're presuming that 100% of price level changes are due to changes in the money supply
No, just the majority of them. Even though demand for housing is going up (population), we would expect prices to rise to stable premium over the cost of creating new housing (corresponding to the lag between demand and production). Instead, what we're observing is a continual inflation in "values" that seems to actually be constrained by the cost of interest on the value. This makes intuitive sense based on how people are actually encouraged to view houses (like various acquaintances thinking a $5k earnest money deposit is serious business, while seemingly oblivious that they're actually spending much much more).
Furthermore, shamelessly implicit in the idea of forced inflation is the viewpoint that people should be forced to "invest". This certainly keeps the financial sector in demand, but obviously hurts the average person who has their savings eroded either passively through inflation or actively through transaction fees and time spent managing relatively small investments.