Which Came First - The Spending Or The Debt?

Tyler Durden's picture

In a wonderfully succinct clip, Professor Antony Davies addresses the oft-cited perspective that Government has a debt problem. While correct in fact, he examines the data and summarily notes that debt is caused by deficits leaving the question of what's to blame - too much spending or too little tax revenues? The dramatic rise in spending per-capita by the government is exponentially larger than the rise in price levels over the last few decades and while so much time is spent on Healthcare costs - even that pales in significance relative to the rise in Federal Government spending. The lesson, he notes, is that we don't have a debt problem, we don't even have a deficit problem, what we have is a spending problem - leaving a tax solution impotent. An interesting conclusion on the day when the Fed once again promises to keep rates low forever implicitly supporting a government budget via its low interest expense...