Why the UK spends £80 billion a year subsidising dead money @RichardJMurphy

Uploaded March 2026 | Updated September 2026, 3 weeks ago

Your savings are dead money. That's the uncomfortable truth about how money works that politicians don't want you to understand. In this video, I explain why UK savings — including ISAs holding over £700 billion and pension funds costing the taxpayer £70 billion a year in subsidies — do nothing for economic growth, don't fund investment, and don't create jobs.

This is about how banks create money and the banking system explained honestly. When a bank makes a loan, it doesn't lend your deposits — it creates new money from nothing. Your savings sitting in a bank deposit simply give the bank cheap capital. They don't fund wages, they don't fund taxation, and they certainly don't fund productive investment in the UK economy. The same applies to the stock market — well over 99% of share transactions are secondhand shares, meaning your money in stocks and pension funds investment doesn't reach companies either.

This matters because savings vs investment is the key question for UK economic growth. We spend £80 billion a year of public money subsidising saving when we should be subsidising productive investment. Understanding how money works, how banks work, and why fractional reserve banking means your deposits are actually at risk is essential financial education. If we shifted incentives from dead money to real investment, we could build a fairer, more productive economy. It's time to tell your MP.

00:00 — Why “savings are dead money” (and why people disagree)
01:10 — The UK obsession with saving: ISAs, pensions, and subsidies
02:20 — What “dead money” actually means in the economy
03:30 — The common myth: savings fund loans and investment
04:40 — What money really is: debt, not a physical thing
05:50 — Why bank deposits are personal contracts, not shared funds
06:50 — How banks actually create money when they lend
08:00 — Why loans create deposits (not the other way around)
09:00 — What savings in banks really do (and don’t do)
10:00 — Deposits as “cheap capital” for banks
10:50 — Why savings don’t fund growth, wages, or production
11:40 — The same problem with shares and pension funds
12:30 — Why most investment is secondhand (and doesn’t create new activity)
13:15 — Why government incentives for saving may be misguided
14:00 — Rethinking policy: from saving subsidies to real investment
14:40 — Conclusion: dead money vs productive economic activity

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

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ON MY BLOG: taxresearch.org.uk/Blog

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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

#richardmurphy #richardjmurphy #economy #economics #accountancy #accounting #tax #uktax #ukeconomy #greennewdeal #uk #money #economy #politics #government #tax #labour #health #life #Savings #DeadMoney #EconomicsExplained #BankingSystem #MoneyCreation #UKEconomy #PoliticalEconomy #FinanceMyths #Investment #EconomicPolicy #ISAs #Pensions #EconomicGrowth #MacroEconomics #BankLoans #MoneyIsDebt #FinancialSystem #WealthCreation #EconomicReform #PublicPolicy #EconomicDebate #ProductiveInvestment #StockMarket #PensionFunds #EconomicReality #GrowthStrategy #UKPolitics #FinanceEducation #ModernEconomics #RethinkEconomics

$Why the UK spends £80 billion a year subsidising dead money Your savings are dead money. Thats the uncomfortable truth about how money works that politicians dont want you to understand. In this video, I explain why UK savings — including ISAs holding over £700 billion and pension funds costing the taxpayer £70 billion a year in subsidies — do nothing for economic growth, dont fund investment, and dont create jobs. This is about how banks create money and the banking system explained honestly. When a bank makes a loan, it doesnt lend your deposits — it creates new money from nothing. Your savings sitting in a bank deposit simply give the bank cheap capital. They dont fund wages, they dont fund taxation, and they certainly dont fund productive investment in the UK economy. The same applies to the stock market — well over 99% of share transactions are secondhand shares, meaning your money in stocks and pension funds investment doesnt reach companies either. This matters because savings vs investment is the key question for UK economic growth. We spend £80 billion a year of public money subsidising saving when we should be subsidising productive investment. Understanding how money works, how banks work, and why fractional reserve banking means your deposits are actually at risk is essential financial education. If we shifted incentives from dead money to real investment, we could build a fairer, more productive economy. Its time to tell your MP. 00:00 — Why “savings are dead money” (and why people disagree) 01:10 — The UK obsession with saving: ISAs, pensions, and subsidies 02:20 — What “dead money” actually means in the economy 03:30 — The common myth: savings fund loans and investment 04:40 — What money really is: debt, not a physical thing 05:50 — Why bank deposits are personal contracts, not shared funds 06:50 — How banks actually create money when they lend 08:00 — Why loans create deposits (not the other way around) 09:00 — What savings in banks really do (and don’t do) 10:00 — Deposits as “cheap capital” for banks 10:50 — Why savings don’t fund growth, wages, or production 11:40 — The same problem with shares and pension funds 12:30 — Why most investment is secondhand (and doesn’t create new activity) 13:15 — Why government incentives for saving may be misguided 14:00 — Rethinking policy: from saving subsidies to real investment 14:40 — Conclusion: dead money vs productive economic activity TRANSCRIPT A transcript for this video is available at: https://www.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. https://www.taxresearch.org.uk/Blog/2025/06/20/chatgpt-prompt-for-a-letter-to-your-mp/ HOW TO SUPPORT US Please consider donating: https://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: http://www.taxresearch.org.uk/Blog/ HIT SUBSCRIBE & GET NOTIFICATIONS Subscribe and get notified of new videos released. INTRODUCTION: https://www.youtube.com/watch?v=HdHsRPy3060 PLAYLISTS: The Wealth Series https://www.youtube.com/playlist?list=PLvRueM6wBgobQLeyZYAagFDMjEFTKbhRD Ecenomics https://www.youtube.com/playlist?list=PLvRueM6wBgob54Gs-fOL-8OAQ-IpduwB4 Britain https://www.youtube.com/playlist?list=PLvRueM6wBgobwTT4ATvJjsf8OO6S7wD10 Tax https://www.youtube.com/playlist?list=PLvRueM6wBgoaMni_12J6ULp3yUJisUZoY MMT https://www.youtube.com/playlist?list=PLvRueM6wBgoZ6jvRGSW5YXu8qogE6aClX Money https://www.youtube.com/playlist?list=PLvRueM6wBgoYnLk1c7syTvoIo8bKYUs5m Climate Change https://www.youtube.com/playlist?list=PLvRueM6wBgob4_wsYaVivWd2WumpPLYwJ USA https://www.youtube.com/playlist?list=PLvRueM6wBgoYYd3dSyU2Oyl3x7bWJOP7H Labour https://www.youtube.com/playlist?list=PLvRueM6wBgoa-KhzG-fnjDSg1WROL1zMw The Trump Administration https://www.youtube.com/playlist?list=PLvRueM6wBgobz41-GLimTho27A3flVWQx #richardmurphy #richardjmurphy #economy #economics #accountancy #accounting #tax #uktax #ukeconomy #greennewdeal #uk #money #economy #politics #government #tax #labour #health #life #Savings #DeadMoney #EconomicsExplained #BankingSystem #MoneyCreation #UKEconomy #PoliticalEconomy #FinanceMyths #Investment #EconomicPolicy #ISAs #Pensions #EconomicGrowth #MacroEconomics #BankLoans #MoneyIsDebt #FinancialSystem #WealthCreation #EconomicReform #PublicPolicy #EconomicDebate #ProductiveInvestment #StockMarket #PensionFunds #EconomicReality #GrowthStrategy #UKPolitics #FinanceEducation #ModernEconomics #RethinkEconomics$

How to revive the UK economy in three simple steps

$Stock markets dont fund investment. Why, then, do we worship them? Just about everything you have been told about stock markets and the UK economy is wrong. Politicians talk nonsense about stock markets. Financial advisors repeat it. The BBC reports FTSE 100 movements as economic news, and economics textbooks embed a set of false thinking in students heads. But the truth is that while the City of London likes to claim that stock markets are essential to saving, investment and economic growth, that is not true. In this video, I challenge the claim that buying shares funds real investment in the economy. To do that, I explain the crucial difference between the primary stock market, where companies issue new shares and raise money, and the secondary stock market, where existing shares are traded. The reality is simple: the primary market is small, and the secondary market dominates. Most stock market activity is just the exchange of existing wealth between savers, not the creation of new investment. I also look at the numbers. Trillions of pounds of shares are traded each year on the London Stock Exchange, but only a small fraction raises new capital for companies. Maybe 98% of all share trading is in secondhand shares, and the companies whose shares are traded get no money at all as a result of that. That breaks the assumed link between stock markets and real economic activity, such as jobs, productivity and growth. The video also explores what stock markets actually do: they provide liquidity for unnecessary share trading, generate potentially quite misleading price signals about the value of companies, and it enables wealth to change hands and accumulate. What they do not reliably ever do is fund productive investment. I then consider the policy implications. The UK provides large tax subsidies to pension saving in shares, yet the return in terms of real investment appears to be negative: the subsidy exceeds the sum that reaches businesses for productive purposes. That raises serious questions about whether public policy is directing money to the right place for the benefit of the economy at large. Finally, I explain what really funds business activity, which is bank lending, retained profits and public investment. If you think stock markets drive growth, this video will challenge that idea, I hope, because that claim is very largely a work of fiction. Check out the poll below: https://www.youtube.com/post/UgkxgeuzuBiSRQ2AZT31JYiJYnLfGNCtliK6 00:00 — The myth of the stock market 00:50 — Claims about savings, investment, and growth 01:40 — Why saving can reduce economic activity 02:20 — The false link between shares and investment 03:10 — Two markets explained: primary vs secondary 04:00 — Primary market: IPOs and new capital 04:50 — Secondary market: trading existing shares 05:30 — Why companies get nothing from most trades 06:20 — The scale: trillions traded vs billions raised 07:10 — Over 95% of activity is secondhand trading 08:00 — Why stock markets don’t drive real investment 08:40 — Financial engineering vs productive growth 09:20 — What stock markets actually do 10:00 — Liquidity: buying and selling shares 10:40 — Price signals vs real company value 11:20 — Markets driven by sentiment and speculation 12:00 — Shares as claims on future income 12:40 — Wealth accumulation vs wealth creation 13:20 — Why the myth persists 14:00 — Policy, media, and economic misunderstanding 14:40 — Rachel Reeves and government policy 15:10 — Alternatives: bank lending and retained profits 15:50 — Rethinking pensions, investment, and growth 16:20 — Conclusion: moving beyond the stock market myth TRANSCRIPT A transcript for this video is available at: https://www.taxresearch.org.uk HOW TO SUPPORT US Please consider donating: https://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: http://www.taxresearch.org.uk/Blog/ HIT SUBSCRIBE & GET NOTIFICATIONS Subscribe and get notified of new videos released. INTRODUCTION: https://www.youtube.com/watch?v=HdHsRPy3060 PLAYLISTS: The Wealth Series https://www.youtube.com/playlist?list=PLvRueM6wBgobQLeyZYAagFDMjEFTKbhRD Ecenomics https://www.youtube.com/playlist?list=PLvRueM6wBgob54Gs-fOL-8OAQ-IpduwB4 UKEconomy #StockMarketMyth #PensionFunds #WealthCreation #WealthAccumulation #RachelReeves #Neoliberalism #FTSE100 #UKInvestment #EconomicMyth #MMT #RichardMurphy #FundingTheFuture #ukeconomy #investing #finance #money #stockmarket #stocks #wareconomy #war #iran #usa$

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