It starts with Nixon taking us off the gold standard and, more importantly, trashing the Bretton Woods agreement. It was the transition to a fiat currency with floating exchange rates but — and this is crucial — the Fed continued(s) to manage as if it were a commodity based currency.
The most immediate consequence was that our trade, which from post-WW2 had been balanced, went into deficit which persists to this day of course.
No, I'm not a mercantilist. And trade is a wonderful thing. But the result was that CPI started to "unravel". It's not just one number but is actually composed of around twenty different categories that the BLS tracks; clothes, food, healthcare, cars, etc. The opening of trade meant we started to import a lot more stuff but only certain kinds of stuff, hence the unravelling. So "stuff", basically consumer goods, the stuff you buy at Walmart and Target got relatively cheaper. Relative to what? Stuff you can't import. Housing for one. But most dramatically professional services; legal, medical, and educational top that list.
A lot of ink has been spilled over why the hell is education or healthcare so expensive? Indeed, inflation in the professional services categories has been running a fairly constant 2.5 - 3.0 times higher than the overall rate of inflation while those consumer goods just keep getting cheaper. This is where Fed management comes in. The Fed has an inflation target of 2-3%. Left to its own devices the cheaper goods from overseas would result in deflation which econ theory and experience says is very bad.
Recession, depression, not good at all. The other thing that happens is in the aggregate American workers don't earn enough to purchase all the goods to keep things ticking along. By the very definition of a trade deficit we purchase and consume more than we produce and sell. So wages stagnate, and debt both public and private rises. It has to, this is just accounting, not even really econ.