The Fed’s Miran Exposes How Economists Got Tariffs Completely Wrong
Federal Reserve Governor Stephen Miran delivered a speech Monday taking apart the tariff-inflation panic. His bottom line: tariffs should raise the consumer price level by around two-tenths of one percent . Even under a full pass-through assumption, he puts the outer bound at roughly four-tenths, with the low end near zero if wholesalers absorb the cost.
The key is tax incidence: who can move and who’s stuck.
Basic economics says the answer to the question of who bears the burden of a tax depends on flexibility. The side that can adjust—buy elsewhere, sell elsewhere—escapes…
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