Uploaded March 2026 | Updated September 2026, 3 weeks ago
Inflation is likely to rise again, but governments are reaching for the wrong solution.
When policymakers see inflation, they instinctively raise interest rates and try to slow the economy. But that only works if inflation is caused by excessive demand.
Right now it is not.
The inflation risk facing the UK comes from supply shocks driven by war, energy disruption and broken supply chains. Higher interest rates cannot produce more oil, reopen trade routes or repair supply chains.
What they can do is damage the rest of the economy.
In this video, I explain why governments repeatedly make this mistake and what their real job should be during a crisis: protecting people, preventing profiteering and stabilising the economy while the shock passes.
We look at why these traditional fiscal policy and monetary policy responses fail to address the core issues when inflation is not demand-driven.
TRANSCRIPT
A transcript for this video is available at: taxresearch.org.uk
IF YOU WANT TO WRITE TO YOUR MP ABOUT ISSUES IN THIS VIDEO
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here. taxresearch.org.uk/Blog/2025/06/20/chatgpt-prompt-for-a-letter-to-your-mp
HOW TO SUPPORT US
Please consider donating: ko-fi.com/taxresearch
ABOUT RICHARD MURPHY
Richard Murphy is Emeritus Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best-known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
RICHARD MURPHY ON BLUESKY:
https://bsky.app/profile/richardjmurphy.bsky.social
OR
ON MY BLOG: taxresearch.org.uk/Blog
HIT SUBSCRIBE & GET NOTIFICATIONS
Subscribe and get notified of new videos released.
INTRODUCTION: youtube.com/watch?v=HdHsRPy3060
PLAYLISTS:
The Wealth Series
youtube.com/playlist?list=PLvRueM6wBgobQLeyZYAagFDMjEFTKbhRD
Ecenomics
youtube.com/playlist?list=PLvRueM6wBgob54Gs-fOL-8OAQ-IpduwB4
Britain
youtube.com/playlist?list=PLvRueM6wBgobwTT4ATvJjsf8OO6S7wD10
Tax
youtube.com/playlist?list=PLvRueM6wBgoaMni_12J6ULp3yUJisUZoY
MMT
youtube.com/playlist?list=PLvRueM6wBgoZ6jvRGSW5YXu8qogE6aClX
Money
youtube.com/playlist?list=PLvRueM6wBgoYnLk1c7syTvoIo8bKYUs5m
Climate Change
youtube.com/playlist?list=PLvRueM6wBgob4_wsYaVivWd2WumpPLYwJ
USA
youtube.com/playlist?list=PLvRueM6wBgoYYd3dSyU2Oyl3x7bWJOP7H
Labour
youtube.com/playlist?list=PLvRueM6wBgoa-KhzG-fnjDSg1WROL1zMw
The Trump Administration
youtube.com/playlist?list=PLvRueM6wBgobz41-GLimTho27A3flVWQx
#InflationExplained #InterestRates #SupplyShock #EnergyCrisis #WarInflation #EconomicPolicy #PoliticalEconomy #BankOfEngland #CentralBanks #CostOfLivingCrisis #EconomicStability #PolicyMistakes #EconomicCrisis #EnergyPrices #BrokenSupplyChains #WarAndEconomics #RecessionRisk #MortgageCosts #PublicPolicy #EconomicDebate #Macroeconomics #MMT #ModernMonetaryTheory #PoliticsOfCare #FundingTheFuture #RichardMurphy #EconomicJustice #InflationPolicy #CrisisEconomics #EconomicReality
Inflation is likely to rise again, but governments are reaching for the wrong solution.
When policymakers see inflation, they instinctively raise interest rates and try to slow the economy. But that only works if inflation is caused by excessive demand.
Right now it is not.
The inflation risk facing the UK comes from supply shocks driven by war, energy disruption and broken supply chains. Higher interest rates cannot produce more oil, reopen trade routes or repair supply chains.
What they can do is damage the rest of the economy.
In this video, I explain why governments repeatedly make this mistake and what their real job should be during a crisis: protecting people, preventing profiteering and stabilising the economy while the shock passes.
We look at why these traditional fiscal policy and monetary policy responses fail to address the core issues when inflation is not demand-driven.
TRANSCRIPT
A transcript for this video is available at: taxresearch.org.uk
IF YOU WANT TO WRITE TO YOUR MP ABOUT ISSUES IN THIS VIDEO
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here. taxresearch.org.uk/Blog/2025/06/20/chatgpt-prompt-for-a-letter-to-your-mp
HOW TO SUPPORT US
Please consider donating: ko-fi.com/taxresearch
ABOUT RICHARD MURPHY
Richard Murphy is Emeritus Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best-known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
RICHARD MURPHY ON BLUESKY:
https://bsky.app/profile/richardjmurphy.bsky.social
OR
ON MY BLOG: taxresearch.org.uk/Blog
HIT SUBSCRIBE & GET NOTIFICATIONS
Subscribe and get notified of new videos released.
INTRODUCTION: youtube.com/watch?v=HdHsRPy3060
PLAYLISTS:
The Wealth Series
youtube.com/playlist?list=PLvRueM6wBgobQLeyZYAagFDMjEFTKbhRD
Ecenomics
youtube.com/playlist?list=PLvRueM6wBgob54Gs-fOL-8OAQ-IpduwB4
Britain
youtube.com/playlist?list=PLvRueM6wBgobwTT4ATvJjsf8OO6S7wD10
Tax
youtube.com/playlist?list=PLvRueM6wBgoaMni_12J6ULp3yUJisUZoY
MMT
youtube.com/playlist?list=PLvRueM6wBgoZ6jvRGSW5YXu8qogE6aClX
Money
youtube.com/playlist?list=PLvRueM6wBgoYnLk1c7syTvoIo8bKYUs5m
Climate Change
youtube.com/playlist?list=PLvRueM6wBgob4_wsYaVivWd2WumpPLYwJ
USA
youtube.com/playlist?list=PLvRueM6wBgoYYd3dSyU2Oyl3x7bWJOP7H
Labour
youtube.com/playlist?list=PLvRueM6wBgoa-KhzG-fnjDSg1WROL1zMw
The Trump Administration
youtube.com/playlist?list=PLvRueM6wBgobz41-GLimTho27A3flVWQx
#InflationExplained #InterestRates #SupplyShock #EnergyCrisis #WarInflation #EconomicPolicy #PoliticalEconomy #BankOfEngland #CentralBanks #CostOfLivingCrisis #EconomicStability #PolicyMistakes #EconomicCrisis #EnergyPrices #BrokenSupplyChains #WarAndEconomics #RecessionRisk #MortgageCosts #PublicPolicy #EconomicDebate #Macroeconomics #MMT #ModernMonetaryTheory #PoliticsOfCare #FundingTheFuture #RichardMurphy #EconomicJustice #InflationPolicy #CrisisEconomics #EconomicReality
