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...


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jcia's picture

Con artists have always lived.

The thing today though is... that they have made it legal.

transaccountin's picture
'Real' trading in U.S. markets is down to 16 percent; the rest is machines


'Real' Investors Eclipsed by Fast Trading

By Telis Demos
Financial Times, London
Tuesday, April 24, 2012


NEW YORK -- Trading by "real" investors is taking up the smallest share of US stock market volumes in more than a decade, according to a recent study.

The findings highlight how US trading activity is increasingly being fuelled by fast turnover of shares by independent firms and the market-making desks of brokerages, many using high-frequency trading engines.

Though many argue that such trading lowers costs by narrowing spreads, critics insist that it makes it more difficult for institutional investors to trade larger positions, in turn fuelling a rise in the use of off-exchange "dark pools" and more complex algorithmic trading techniques.

Buckaroo Banzai's picture

Can we all agree to stop calling it "tax revenue", and start calling it "tax confiscations"?

Revenues are EARNED. I think its self-evident that the IRS has not "earned" a fucking penny in its entire, sorry existence.

Dr. No's picture

Agree.  Also hate "The government looses $XXX due to tax cuts.."  They didnt "loose" anything.  They did not confiscate as muchs as they hoped.

barliman's picture


On the the right track ...

Even more directly - we don't have a SPENDING problem, we have a GOVERNMENT problem.

Until we take a chainsaw to federal, state and local governments - we will ALWAYS have a spending problem.


NorthPole's picture

How come so many people - native speakers no less - confuse 'lose' with 'loose' these days?


Fill in the gaps: Dr. No will ____ his anal virginity tonight. His anus will be very ____.

Sudden Debt's picture

You work, they collect.
You work, and the other side that never worked a day in their lives spend it.
You work.... For them.
It's just more easy than a whip.

Thomas's picture

The rich take from the middle to give to the poor to retain power. I used to hate the "rich get richer/poor get poorer" meme; now I believe it and endorse it as our biggest problem. BTW-It ain't Steve Jobs, Bill Gates, the Google boys, or any other empire builders. It's the bankers. They are a cell within our economy that metasticized. Their removal is the gruesome and very uncertain part.

Pool Shark's picture



Actually, it IS Steve Jobs and the 'empire builders' also;

They made their fortunes on the backs of Chinese slave labourers.

They became rich by exploiting the poor... 

JW n FL's picture



The Lucky 400 know that the Middle is Brain Washed with Dreams of being Someone and the Poor, Un-Educated Wall Mart Shoppers are too busy importing a 3rd World Living Standard thru their POWER Shopping! LOL!!


And let’s not mention the 2 Largest Lobby’s in America who collect more Government Hand Outs  and Secret Loans from the Federal Reserve!



The 2 Largest Lobby’s in America.. Collect the Largest Government Hand Outs and Secret Loans from the Federal Reserve! Those are the Numerical Facts! Bribe the Government and Get the Most Tax Dollars paid in by the Working Class Sheepeople!





(Huffington Post for those of you here that need it)

The FBI / CIA / NSA not only ignore these Numerical Facts! The FBI / CIA / NSA Promote and Support the Theft of Monies from the Working Class Outright! By looking the other way! So that when these Persons Charged with Protecting National Interests Retire from Looking the Other Way! That they may be hired in the Private Sector! High Paid Consultants who spent an entire Career, Looking the Other Way are then Paid to do what they do “O” so well!

For example!


Trustee Finds No Missing MF Global Funds at J.P. Morgan



Judge Rejects MF Global Priority Bid



The Senator Letters That Bash MF Global’s Bonus Plan




SO! not only did the Ex-FBI Chief Look the other way! He suppressed Information and then!! Tried to get Bonus Monies for his Crooked Buddies that Just Ripped Off the Working Class!


But HAY!! As long as it is not YOUR Money!!

As Long as it is someone else getting screwed!!

Those City Slickers! LOL!! When the Government is done with the City’s the Government will start the Shock and Awe! for the Middle America Cowards who sat on their hands and watched the City Slickers get Murdered!


At first they can for the Fresh Air!

I lived on the ocean.. so it didn’t affect me so I didn’t say shit!

Then they came for the Fresh Food!  

I lived in an area with a 12 month grow season.. so it didn’t affect me so I didn’t say shit!

Then they came for the Rights of the Citizens..

I didn’t like the Tea Party or the Occupy People.. so Fuck’em both! Not my problem! Dumb red Necks or Bongo playing hippies are NOT my demographic!  so it didn’t affect me so I didn’t say shit!

Then they came for my Retirement Monies, Wall Street figured out it was more profitable to NOT! pay anyone’s retirement funds back!

I have money offshore.. and I hate the baby boomers who participated in this system and brought us to the end of America! So I was happy those old sell out were being Fucked Over!

Then they came for the Guns!

I didn’t care because I could get on a slow boat and be in the Bahamas in 1 hour! Fuck the Sheep who ALL sat on their hands hating each other just like the Government Brain Washed them to do!

It is better to never agree with anyone else, be divided and lazy! That way the Status Quo can continue un-abated! Let the Poor, Un-Educated, Sheepeople Kill Each Other!

Then we can come in and dis-arm them! For their own protection! And rule them without the worry of having our balls blown off! Death is a Release! No Balls and a Quadriplegic.. smelling your own shit for the rest of you days.. unable to kill yourself is WAYYYYYYYYYYYYY Worse than death!


I hate You! You Hate Me! We ALL! Hate Each Other!! And Wall Street and the Government Continue to Rob Us ALL! BLIND!! With NO!! Resistance! To the Robbery from the Sheepeople!  We are ALL! to busy figuring out ways to not like each other so that we can NOT! EVER!! Stand together to stop the ongoing robbery!

“O” Look!! Trayvon! I mean Mad Cow! I mean Dancing wiff da starz!







El Viejo's picture

I gave you a plus, but "boomers who participated in this system" Huh?? Are we not victims too?? Did we not pay more than our fair share??



Imminent Crucible's picture

We paid more than our fair share? Uh, not too sure about that.

I'm a boomer, but I know this: The SSA says the average SS recipient gets back everything he paid into the system in about 4.5 years.

"But wait! That doesn't account for inflation...and what about interest income or capital gains, or something for the 45 years they kept our money?"

Good point, but they didn't keep our money. They spent it on every vote they could buy: boomers, bankers, bums, blowjobs. It's gone.  That's the part I hate: It wasn't a retirement fund contribution; it was a "payroll tax".

And taxes are just the price of being a slave to our bankster masters. I don't object to seeing Social Security disappear, if the rapacious bankster whore govt disappears with it.

Reptil's picture

RIght. There's not a debt problem, or even a problem with balancing budgets. There's a moral problem, and that is that one part of the society is in a different position than the rest, has developed a hunger for all power without giving a second thought about accountabillity and to keep the body they now started leeching on alive. This has led to an imbalance, i.o.w. there's a corruption problem. Everything else; means to protect themselves, to feed themselves, to educate themselves (and so allow influx into the "club of privileged") has been done away with, with increasing pace. If one part of humanity is treated as void of rights the same goes for the part that pretends they do retain these. There's no middle road. This is a symptome of the problem, not the cause.


I need a drink. And it's only wednesday. :-S

El Viejo's picture

We could have a voluntary tax system like in Greece.

insanelysane's picture

Greece is a perfect example where the people that pay the taxes stopped paying the taxes because they see the disparity between private sector work and "public servant work."  Cash transactions are key in Greece and are not reported so it can cost you 500 Euros cash to get your car fixed or 1,000 Euros check or credit to get the same car fixed.  Greeks aren't lazy or stupid or criminals (well according to the tax police they are criminals), the tax paying citizens realized years ago they were getting screwed and stopped paying where ever they could.

El Viejo's picture

So its like 'the taxed' union strike to get management to show some respect. That may work here but count on another leg down for the economy as there are even more unemployed(from Fed Employee layoffs- which are probably coming next anyway).  I don't disagree with your disparity assertion see graph below: (I remember a time when govt employees were payed less than the private sector because they had a guaranteed job for life. We were the risk takers, but we know how that turned out) BTW Federal Employees salaries were frozen and will be for at least three years. Unfortunately private sector salaries are diminishing.


TheAntiBen's picture

I'll start calling it "tax confiscations" if we can agree to start calling "public schools" by their real name, "government schools."  Deal?

Buckaroo Banzai's picture

Make that "government indoctrination centers" and I'm on board with ya.

jwoop66's picture

saw this done by a few different folks.  Everyone should see it.   So much for tax the rich, I guess...

mikla's picture

People do not understand that tax receipts are irrelevant.

Tax receipts have no correlation to government spending.

And, government spending is merely to establish control.

If the government spending were infinite, then control would similarly be infinite.

Most importantly, it is *fun* to spend Other People's Money.

When you combine that with the fact that "elected-leaders" are mental midgets (typically lacking morals, ethics, and competence), they are merely spending other people's money for self-gratification and self-enrichment.

As the video shows, there is no scenario by which tax revenue can ever be in-line with government appetite for spending.

brewing's picture

the video should be mandatory viewing for anyone that calls themself a "politician"...

TheAntiBen's picture

It should be manditory for every grade in the government school system, starting from the 6th grade up.

GeneMarchbanks's picture

'You down wit OPM?'

'Yea, you know them'

Buckaroo Banzai's picture

Government spending didn't get out of control until after the income tax was implemented in 1913. We can see that by looking at federal spending levels.

Now, obviously, we need to repeal the income tax on natural persons. That is self-evident to anybody who takes freedom and liberty at all seriously.

But, it does beg a chicken-or-the-egg type of question: Did the additional income tax, and the prospect of being able to loot every citizens paycheck, cause the income tax? i.e., now "the math worked" to jack up spending to the sky?

Or, was it more like a psy-ops victory-- if the people were willing to give up their liberty and become slaves to the federal government via an income tax, does that mean they were then sufficiently demoralized such that the Federal government would have the green light to impose its tyranny on a population that clearly had lost the will to fight back?

I'm inclined to go with the latter view, myself.

Dr. No's picture

Another related event was tax withholding.  Previous to witholding, people wrote a check on April 15th for taxes incurred the previous year.  Mr. Friedman recommeded the tax witholding to increase efficiency.  that bastard created a monster.

Buckaroo Banzai's picture

Yes, excellent point.

A friend of mine is an accountant.  When he was just starting out, he did a lot of tax returns, and as a Jr. Accountant, he handled the smaller customers exclusively.

He said he spent a lot of time trying to explain how tax withholding and tax refunds worked, and why a "big refund" isn't necessarily good if you have had a lot of money taken out of your paycheck over the year.

He was amazed at how many people simply could not grasp this very basic concept. They always wanted the higher refund (i.e. more money taken out of their paycheck), and not even for any good reason other than, "but a bigger refund means I pay less taxes!"

He said he would even resort to drawing pictures to demonstrate that no matter how big your "refund" was, you'd always pay the same amount of taxes. Most of the time it was futile.

Firms like HR Block actually use this misapprehension against their clients and create further confusion in the marketplace, which would drive my friend even crazier.

Now that he's got some seniority, he doesn't deal with small clients much anymore... and now the Jr. Accountants come to him expressing the same frustration and bewilderment. He just laughs it off and tells them they are wasting their time.

Automatic withholding is positively diabolical.

pods's picture

Another use of the income tax is it allows the government some regulation of runaway inflation. 

Economy heats up, raise taxes. Economy slows, cut taxes.

Just another control mechanism.  

earleflorida's picture

there is absolutely no argument in regarding which came first - the chicken or the egg?

the chicken "is" the egg, therefore, I am the 'Chicken',... simple logic for a mindless brood! 

now, let us not hear a 'peep', as i grow amphibious to this nonsense, Dr. Darwin i presume? 

Belarusian Bull's picture

State is a parasite. It will comsume as much as you give, not caring about it's host, sucking it dry.

When the host can not sustain the parasite anymore, you get a new bloodbath. Plenty of them in history books of any race and any nation.


El Viejo's picture


Er Yup.  It aint charity when you give away other's money.

blindman's picture

government spending is the bond market. it is the transfer of
the value of currency from labor, production and taxpayers
to banks and others involved in looting the banks for personal
fun and profit. it is also the source of the money supply or
legal tender supply. as it is now the debt is the money, the spending
is the debt, and the "money", and this video avoids it and the main
function which if not corrected will lead the world into violent
oblivion and no one will have a clue as to why the conceptual
overlay which man is required to place on the world has turned a
perfectly good and giving world into a pile of shit and piss in
which his/her children will inevitably grovel and internalize.

GeneMarchbanks's picture

'We don't have a debt problem we have a spending problem'



SemperFord's picture

Not we, the Governement has a spending problem, God I wish an algo went berzerk and just crashed this mofo!!!

Village Smithy's picture

This guy should be the chairman of the Federal Reserve.

Buzzworthy's picture

Spending, bitchez

Dr. Richard Head's picture

Shit, there is an idea.  Buy stocks you know will dive to get a capital loss and deduction from taxes. 

Dr. No's picture

Thats right up there with not selling in order to not pay capital gains.

Swarmee's picture

If only. Us mere humans are capped at $3k in losses to offset taxes in any given year, whereas a corporate superperson may claim unlimited losses each year and offset their tax liability down to zero.

That's why some corporations pay zero taxes while us wage slaves will continue to owe even as our investments are driven to zero by serial collapses.

Spastica Rex's picture

How could people afford to buy important things like iStuff if other stuff wasn't subsidized by government spending? 

rubearish10's picture

They couldn't. What if those underwater mortgage squatters had to pay rent too? Nanny State!

DOT's picture

iEBT  gets stuff for me !

The Axe's picture

right on brother.........truth!!!

narnia's picture

We have a scope of government problem.

TideFighter's picture

Fuck this, let's settle this shit right now.

If you made zero to $25,000.00, you get a knife.

If you made between $25,000.01 and $250,000, you get a gun.

If you made between $250,000.01 and $1,000,000.00 , you get a grenade launcher. 

If you made more than $1,000,000.01, you get a tank.

If you are a bankster/fedster/fraudster, you get a rubber band.

Now fire that starter pistol and let the fucking games begin.

Marginal Call's picture

Sounds fun.  But I'd take a rifle every time.

pods's picture

Exponential rise in debt?

Future P=today's P+I.

Not a problem, but an inherent characteristic of the system.