Her planned reforms, to be included in a new Enhancing Financial Services Bill, will allow Britain's five largest retail banks, Barclays, HSBC, Lloyds, NatWest and Santander UK, to blur the boundary between their high-street operations and their riskier investment banking arms. The Treasury is framing this, predictably, as a growth measure. Actually, it is a reversal of regulations put in place to prevent a recurrence of the 2008 global financial crisis.

The timing could scarcely be worse. And the decision could scarcely be more dangerous.

Ring-fencing was introduced after the 2008 financial crisis for a simple reason. It was apparent that when banks that hold ordinary people's deposits are also permitted to gamble in wholesale and investment markets, the consequences of their failures fall on the government and then on the public. The firewall between retail and investment banking was designed to ensure that, if speculative activity went wrong, shareholders and bondholders bore the cost, and not depositors or the Treasury. The rign-fencing regime has always been half-hearted and potentially imperfect, but it was serious in its intent. It recognised that banking is not a normal industry and that the state is always its insurer of last resort.

Reeves is now dismantling that recognition in pursuit of what she calls growth. This is potentially disastrous, most especially as to timing.

First, the context matters enormously. We are not living through a period of financial calm. The war in the Middle East is driving up energy costs. Global financial markets are under sustained pressure. The geopolitical environment is the most unstable it has been since the Cold War. This, then, is precisely the moment when financial stability frameworks should be strengthened, not weakened.

Second, the stated rationale is unconvincing. The claim is that loosening ring-fencing will unlock lending to small businesses and infrastructure projects aligned with government objectives. But that is not primarily what investment banking does. Investment banking speculates. It trades in financial instruments. It creates complex products that generate returns for shareholders and bonuses for traders, and when it fails, it creates systemic crises. Allowing retail deposits to support or subsidise that activity, even indirectly, through shared services and reduced funding costs, is not a growth strategy. It is a subsidy to finance capital at the expense of financial security.

Third, the lobbying trail is significant here. The bosses of HSBC, Lloyds, NatWest and Santander wrote to Reeves last year calling for the ring-fence to be scrapped, arguing it put UK banks at a competitive disadvantage. The Chancellor has now obliged. This is not evidence-based policymaking. It is the financial sector writing its own regulatory framework, with a Chancellor too eager (or even desperate) for City approval to resist.

Fourth, the Bank of England has not been a willing partner. The Governor, Andrew Bailey, was clear last year that he disagreed with Reeves's characterisation of regulation as "a boot on the neck of businesses," and that regulators cannot "compromise on basic financial stability." That warning has apparently been overridden by Treasury ambition.

The consequences of this decision, if it proceeds, are not abstract. When, not if, the next financial shock arrives, the exposure of retail banking to investment banking risk will be greater than it would otherwise be. The public, whose deposits underpin the entire system, will be more vulnerable. As I always argue, they are in fact the biggest suppliers of capital to the whole banking system, a fact that the ringfencing system implicitly recognised and which Reeves is now ignoring again. The government, which will once again be called upon to stabilise the banks, will face larger bills as a result. And the households already struggling with energy costs, stagnant wages, and eroded public services will pay the price, yet again, as austerity is imposed.

There is a pattern here. Reeves came to the Treasury committed to earning the City's trust. She has delivered: deregulation of financial services, a search for a more compliant banking regulator, and now the partial dismantling of the most significant post-crisis safeguard. In exchange, the City has given her warm words and lobbying demands for more of the same. They are sending out strong signals that she should not be replaced right now, whatever happens to Starmer. It is easy to see why.

And worst of all, this is not a growth strategy. It is a protection racket run in reverse, with the Chancellor offering concessions to the most powerful actors in the economy in the hope that they will generate activity that might eventually reach everyone else. History tells us trickle-down never works. Reeves is relying on it, yet again.

The right response to financial instability is not to deregulate the institutions most capable of amplifying it. It is to reinforce existing protections, to tax financial speculation appropriately, to ensure that banking serves the real economy rather than extracting from it, and to insulate public services from the consequences of private financial failure.

Reeves should reverse course. If she will not, Parliament must scrutinise the Enhancing Financial Services Bill with the seriousness it demands. The firewall that was built after 2008 was not a bureaucratic obstruction. It was hard-won wisdom. Tearing it down, in the middle of a period of acute global instability, is not bold reform. It is a gamble with other people's money, and as usual, it will be ordinary people who pay when the bet fails.

This morning we have another new idea. These are called 'Debate Ammunition'. The aim here is to develop ideas from the day's video into arguments that can be used for debate. They will be short - around two pages of A4 in length and will be in a consistent format, although that is bound to take a little time to become settled.

The logic behind these is to help all those who say they need arguments to use in discussions with people they meet. Watching the video is one thing, then. Treat that as if it were the meal. The Debate Ammunition series will provide the recipes so you can take the argument forward in your own way. I hope they give you the agency and the confidence to use this material.

Feedback would be useful at this moment.

Importantly, eventually these briefings will always be published as PDFs. The PDF for this video is available here. The reason is simple. Layout is much easier that way. And PDFs preserve layout on multiple platforms, and that can be hard, so this will always be the best way to view them.

That said, this is the Debate Ammunition for this morning's video. Let me know what you think.

THE RICHARD J MURPHY YOUTUBE CHANNEL

DEBATE AMMUNITION

Funding the Future | Issue #1 | 17 May 2026

TODAY'S TOPIC

Inheritance tax, London wealth, and the FT’s wrong conclusion

THE CORE ARGUMENT

The FT is wrong to claim that inheritance tax data shows the Treasury depends on wealthy Londoners. What the data really shows is that UK economic policy has created grotesque regional inequality, and inheritance tax is far too weak to challenge dynastic wealth.

KEY STATISTICS

THE ARGUMENT STRUCTURE

Step 1 — The FT framed the story backwards: The FT treated wealthy Londoners as if they fund the state. That is the household analogy dressed up as fiscal analysis.

Step 2 — Tax does not fund spending: A currency-issuing government creates money when it spends. Tax withdraws spending power, controls inflation, gives value to the currency, corrects market failures, shapes policy, redistributes wealth, and builds democratic accountability.

Step 3 — Inheritance tax is about redistribution: Inheritance tax should stop dynastic wealth compounding across generations. The data shows it is failing because wealth remains massively concentrated in a handful of London postcodes.

Step 4 — The real issue is regional policy failure: Scotland, Wales, the north and the Midlands are not poor because they lack talent. They are asset-poor because successive governments concentrated housing wealth, finance, infrastructure and investment in London and the southeast.

THEIR ARGUMENT → YOUR REBUTTAL

 THE ONE-LINER

“Britain does not depend on wealthy Londoners; wealthy Londoners depend on a Britain whose economy has been rigged in their favour.”

ABOUT RICHARD MURPHY

Richard Murphy is a political economist, emeritus professor of accounting practice at Sheffield University Management School, a former professor of international political economy and, for 42 years, a practicing chartered accountant. As a tax justice campaigner, he created country-by-country reporting, which is now legally required for multinational corporations’ tax reporting in more than 70 countries around the world to tackle tax haven abuse. He is one of the UK’s most widely read heterodox economics bloggers. He is the author of the Funding the Future blog and runs the Richard J Murphy YouTube channel, which has more than 370,000 subscribers. He co-founded both the Tax Justice Network and the Green New Deal.

YOU CAN FIND RICHARD AT:

• Blog, Funding the Future blog
• Twitter/X, @richardjmurphy
• Bluesky, @richardjmurphy
• YouTube, Richard J Murphy YouTube channel

You can find it here.

Please give the process of following the link a try. 200 people from this site did so yesterday, and the feedback was good.

But the FT then drew the wrong conclusion.

This video explains why the real story is not that Britain depends on wealthy Londoners to fund the state. A currency-issuing government does not depend on the rich for money. Instead, the data reveals something much bigger and more important, which is the catastrophic consequences of the concentration of wealth in London and the long-term failure of UK regional economic policy.

I explain what tax is actually for, why inheritance tax is meant to redistribute wealth, and why the UK economy has become so distorted that entire regions have been systematically left behind.

This is a story about inequality, financial power, failed neoliberal economics and the political choices that created modern Britain.

The real question is not whether the government can afford to, or should, tax wealth. It is about why wealth has been allowed to become so concentrated in the first place.

If you want to understand inheritance tax, inequality, the role of the Financial Times in the wealth tax debate, and why Britain’s economy increasingly works only for a wealthy minority, this video explains the bigger picture.

This is the audio version:

This is the transcript:

The Financial Times recently published some quite remarkable data on inheritance tax and then drew entirely the wrong conclusions from it.

What they found was that in just five London parliamentary constituencies, more inheritance tax was paid than in the whole of Scotland and Wales combined.

When they added together the inheritance tax paid in 10 London constituencies, they found that more inheritance tax was paid there than in the entire north of England over five years.

Now, this is genuinely important data about the state of Britain. Don’t get me wrong, I think that what the FT has found is important, but the FT’s analysis of what this means is not just wrong, it is predictably wrong. Their framing serves a particular ideological interest, and that is what this video is all about.

The FT’s central claim is that this shows that the UK Treasury depends on wealthy Londoners for its revenue. The whole focus of the article is that the government is financially dependent upon the wealthy people of the southeast of England. The implication is that ministers must tread carefully around those wealthy people or lose the revenue they provide, which, they say, will restrict the role of government in society. This framing treats wealthy Londoners as essential funders of the state. This is the household analogy, dressed up as fiscal analysis.

A currency-issuing government does not depend on anyone for money. It creates all the money it requires when it spends, and the FT is ignoring that fact. This is not a neutral error. It is a recurring political claim. The idea that government depends on wealthy people is repeated constantly in the elite financial media, and there is nothing more elite in the financial media than the Financial Times.

It serves to position the wealthy as indispensable and any taxation of them as reckless.

It treats wealth concentration as a natural condition rather than a policy outcome, and it consistently obscures what tax is actually for and how government finance actually works.

We should be clear that this is an ideological position on the part of the FT. It is not about economics, and let’s just stand back for a moment and consider what tax really is for.

Tax has, and let’s be clear about this, six distinct purposes within our economy and raising revenue to fund government spending is not one of them. Government spending is financed by the Bank of England, which creates money on the government’s behalf every time it receives an instruction from a government department to make a payment in fulfilment of the government’s approved budget. That is how money is created in the UK. That is how the government is funded, and as a consequence, the government creates new money every day.

Tax exists to control inflation by withdrawing spending power from the economy. Tax is just a debt created by law, by the government, which it has the power to collect with menaces if necessary, from the people who owe it inside the UK economy, and the reason why that debt has to be paid is to withdraw spending power from the economy which you would otherwise have, which has been created by the government by its money creation process through the Bank of England. That is the primary purpose of taxation.

But let’s also be clear, tax, in the process, makes the UK’s currency, the pound, valuable by creating demand for those pounds to pay the tax bills. So we do use the pound because we have to pay our tax in it.

Tax also corrects for market failures, and we can see that when we come to things like tobacco, alcohol, and carbon pricing.

Meanwhile, tax is key to government fiscal policy. The difference between the amount that the government spends into the economy and the amount that it takes out of the economy does result in fiscal stimulus or fiscal suppression, and therefore, tax is a key government policy instrument. The same process can also be used to encourage some types of business activity and to suppress others.

Meanwhile, tax redistributes wealth and income to build a fairer and more equal society, and that is important because there’s lots of evidence that the sixth purpose of tax is to build a relationship between us as voters and the government, as the people who are delivering those processes of justice on our behalf.

In this context, inheritance tax is just a redistributive tool and not primarily a revenue measure. It exists because dynastic wealth compounds across generations and entrenches inequality. It is designed to prevent life chances from being determined solely by accidents of birth, and the FT’s revenue framing therefore misses the entire point of this tax. The question is not how much it raises, but whether it is achieving genuine redistribution as a consequence of its existence. On that measure, and by looking at this data, it is clearly not doing nearly enough to achieve that goal.

The FT is asking all the wrong questions, whether deliberately or otherwise. It is asking whether the Treasury can afford to upset wealthy Londoners. That framing positions the wealthy as holding the state to ransom. The right question is: why is UK wealth so grotesquely concentrated in a handful of postcodes, mainly in London?

Their suggestion that five London constituencies can out-pay two entire nations within our union when it comes to inheritance tax shows that we have a massive problem of inequality. This, then, is not just a question about Treasury vulnerability as the FT would frame it. It is a question about the catastrophic, sustained policy failure that has resulted in this gross inequality.

This data reveals the consequences of a failed regional economic policy. The North, Scotland, Wales and the Midlands are not poor because of any lack of talent or effort. Anybody who says they are has got all of that wrong. They were once the powerhouses of the UK economy. They could be, again. They are asset-poor, not because they lack talent, but because government after government after government made choices that concentrated wealth in London.

Housing inflation has been greatest there. Financial sector dominance has been concentrated there, and infrastructure investment has also entirely favoured the southeast of England. Just look at things like the Elizabeth line, when there has been no equivalent outside London of any sort whatsoever.

Productive investment, manufacturing and public services have all been systematically neglected outside London, and the inheritance tax map is the most visible system of that failure. It is not a matter of fiscal management that we are worried about. It is the fact that these regions do not have the wealth that they should enjoy, and the threat that the wealthy will leave is being used by the FT to try to close down every debate on wealth taxation. That is wrong.

The FT’s claim that tax increases will drive away investors is completely nonsensical. That threat is used every time there is a discussion of wealth taxation, and the FT is amplifying it without serious scrutiny of the evidence. The empirical case for large-scale wealth-driven tax exodus is consistently very weak. It simply doesn’t happen. Repeating an unexamined threat is not analysis. It is lobbying on behalf of the wealthy, and the scale of wealth concentration in this data demands much more ambition in response.

The Office for Budget Responsibility is projecting that inheritance tax receipts will reach £12.6 billion by 2029, and that might sound significant, but look at that in the context of total UK financial wealth, and that is around £12 trillion at least, and maybe we are seeing something which is actually a measure of failure.

We collect just one-thousandth of UK financial wealth in inheritance tax payments each year, and that is an indication that all inheritance tax does in its current form is nibble at the edges of dynastic wealth rather than challenge it.

High thresholds, generous exemptions and structural loopholes all limit its redistributive reach, and the likes of Reform are only out there trying to reinforce these weaknesses in that system because they, too, act on behalf of the wealthy. If we are serious about redistribution, the entire structure needs to be rethought.

The real answer to regional inequality is sustained public investment right across the whole country. The regions left behind need substantial and long-term investment and not marginal tax adjustments. Investment in infrastructure, housing, skills, energy and public services must be geographically rebalanced, and a currency-issuing government that has the monetary capacity to make these investments should do them.

Although more inheritance tax might be needed to recover the sums in question, the primary reason for raising inheritance tax charges is to redress inequality. The choice is political and not about money, and in that context, the FT’s framing actively obscures that fact.

In summary, this data should prompt hard questions, none of which the FT thinks to ask.

• Why has UK economic policy produced such extreme regional concentrations of wealth?
• Who has benefited from the policy choices that created and sustained those disparities?
• Is inheritance tax, as currently structured, able to deliver genuine redistribution, or is it merely a gesture?
• What level of rebalancing of investment would it actually take to rebuild regional economies?
• Why are we treating regional inequality as a fiscal risk rather than as a democratic emergency?

These are the questions we should be asking, and the story in this data is all about gross inequality, and the FT has made it about something else entirely.

FT did find important data, but it then buried it under its ideological framing, which it has chosen to adopt. The story is not about the fact that the Treasury is hostage to wealthy Southeast homeowners. The story is that UK policy has been built on an economy that only works for some in London.

Inheritance tax in its current form is far too weak to seriously challenge that concentration of wealth from which we are suffering, and the question is whether the government has the political will to act and whether the FT will ever talk about the need to do so.

That’s my opinion. What’s yours? There’s a poll down below. Please let us have your comments. Please do share this video. Please like this video if that’s what you do, and if you’re so inclined and would like to make a donation to support our work, we’d be very grateful.

Poll

Since 30th March this year, the S&P 500 index in the USA has gone up by approximately 17%:

This, as Katie Martin points out, using not wholly dissimilar language, feels like pre-crash mania. There is a good reason for her concern, which I have also expressed for some time, and that is that this is precisely what we are seeing in this chart.

The long-term chart makes it clear just how absurd the current situation is:

Those engaged in these trades might fear missing out, but what they are actually doing is exposing themselves to enormous risk.

The reality is that, as the realisation dawned that the Strait of Hormuz was closed and unlikely to reopen for some time, with massive economic consequences for the world, stock markets have celebrated as if there is no tomorrow. That might, of course, be one possible reaction to the situation that Donald Trump has created. This particular reaction, however, adds to the economic meltdown I expect this summer and autumn, the risk of a stock market crash. That, I think, is now entirely unavoidable, and to a greater extent than I ever believed before.

Then add to this something important, which is the chart that Katie Martin produced showing what has happened to government bond rates around the world since that stock market euphoria erupted on 30 March. This data is from the FT:

Everywhere, and without exception, traders are, utterly bizarrely, at a time of crisis when they should be heading for safety, selling bonds and buying shares. After all, the money to fund this mania has to come from somewhere, and this chart makes clear its source. When government bonds are sold, the effective interest rate increases. That is because, in practice, the amount of interest paid on bonds is fixed, meaning that if the price falls, as happens in a net selling market, that fixed interest payment appears to be more valuable in terms of the interest rate earned.

I stress, the trend is universal. The UK might have experienced a slightly larger increase in rates than other countries, but it is no exception to the general rule. To therefore pretend that there is a peculiar crisis in the UK, and that this has something to do with whatever Labour might be up to, is total nonsense.

To even pretend that any of this has something to do with a change in the risk profile of gilts, or inflation expectations, or just about anything else, is also utterly absurd.

All that is happening is that market traders are following the herd in pursuit of what they think might be gains, and are ditching government bonds as a result to put all their money into shares, with the risk that they will suffer very large losses as a consequence, at cost to those in whose interests they are meant to act, many of whom will be people saving for their pensions.

This behaviour defies all rationality. Anyone with any sense can perceive that we are facing fuel and food shortages, and the risk of massive supply chain disruptions as a consequence of Trump’s war against Iran, with a resulting risk of economic meltdown, substantial falls in corporate profits, the risk of corporate failure, and a banking crisis, both in the mainstream and shadow sectors.

The likelihood that this might be as bad as 1929, with consequences at least as severe if governments do not take action to bail out many of those who will be impacted, is very high indeed. In that case, if you look at what is happening in financial markets, the only reasonable conclusion to reach is that those trading in them are giving themselves a massive dopamine hit at cost to the rest of the world before the crisis arrives.

I am angry because governments are going to have to bail out banks and even major corporations as a result of what is going to happen. We will be doing QE again, but this time we have to get it right.

I am angry because millions, if not billions, of people will suffer the financial consequences of this coming crash, just as they will also suffer the direct economic consequences to their employment prospects and the real physical consequences of supply shortages.

I am angry for all the people whose futures will be destroyed as a consequence of this utter folly.

I am angered by most in the media, who are completely distorting this story to say that markets have lost confidence in governments, when in fact the true story is that we should have lost confidence in markets.

I am angry with the media that says nothing about the idiots trading this way, whilst demanding that governments must serve them.

I am angry that we have ministers who apparently cannot see what is going to happen, or who are doing absolutely nothing about it, meaning they are, as a consequence, contributing to the disaster heading our way.

I am angry at the pretence that life is carrying on as normal when it is doing anything but that.

I am angry that we do not have financial transaction taxes that could kick in to prevent speculative trading of this sort.

I am angry that we still have a bias within our tax system towards wealth and against ordinary people, which means folly of this sort is supported by the state.

I am angry that we have banking regulations and financial market regulations that do nothing to prevent all of this.

I am angry that neoliberal politicians still think, despite all the evidence to the contrary, that markets are rational when they are anything but, as this situation shows.

And one day, I know I will come back to this post. I am going to say, “I told you so”, and I will be sorry to say that, but I know it is going to happen. In the face of this type of madness, nothing else is possible. In the history of stock market investment, no other resolution to madness of this sort has ever been found.

My advice is then, to batten down the hatches, expect the worst, and, if you have any control over your own financial affairs, and I am well aware that not everybody has, look for safety. Do not worry about missing out now. Take the long-term view. Markest may be abandoning caution. There is no reason for you to do the same.

This, however, is not the only development that we are working on at present. Whilst I have absolutely no intention of giving up publishing this blog, we have recognised, as a team, that we need to reach wider audiences.

The move into YouTube two years ago helped achieve that goal in one way. There are a great many people who are unwilling to read blogs who are more than happy to watch YouTube videos, as we have discovered, and our reach on that channel is now considerably bigger than it is here.

At the same time, the Substack phenomenon has developed over the last couple of years, so that, for many people, independent blogs like this one are now a little-known phenomenon, and Substack is their preferred source of independent reading. We think it would be foolish of us to ignore this trend, and so we are planning to invest more in that channel, partly to assist the publication of long-form content, to which it is particularly suited, partly to assist the presentation of material in a different way to that used here, and partly to reach different audiences.

Our experiments with this suggest that we can reach new audiences in this way, and that there is significant room for growth as a result. We have had 7,000 views on posts on Substack over the last couple of days, and now have almost as many subscribers to our email list there as we do to the subscriber list for this blog. And that has happened before we have put any serious effort into the design or presentation of the content, which we are now beginning to do.

The consequence is that some more essay-based material will now be appearing on Substack before it does here, and it may be that in future I will only provide links here to Substack material rather than reposting it, which is not always a good idea as a result of Google search algorithms, which get confused by the same material appearing in two places at once.

The first post of this type appeared yesterday and was itself the first of a three-part series on Reform, why it has grown, the challenges it creates, and the ways in which those challenges can be addressed.

Substack seems ideally suited to this series-style approach, and the remaining articles in this series will appear over the next few days before I move on to a series on the Greens, most of which is already in draft.

I will provide links to these materials here, but it may be worth your while looking at Substack for some content from now on because we are expecting it to become a major part of our publishing programme over time. If things work as planned, just as Thomas has a major role in the YouTube channel that we publish, I am expecting James to play a similar role in Substack content creation, although I will remain the primary content author and retain final editorial control in both cases.

That first Reform essay is available here, and the second may be out later this morning.

Richard Murphy’s Views on Modern Monetary Theory

This post is one of an ongoing series explaining Richard Murphy’s views on significant topics in economics, political economy, politics, taxation, and accounting. It should be read as such, as an overview of a position developed across many years of writing and analysis, and not as a comprehensive treatment. Where more detail is required, the reading list at the foot of this post is a good starting point.

MMT as description, not prescription

Richard Murphy has written extensively about modern monetary theory over many years, and one of the points he returns to most insistently is the nature of what MMT actually is. It is, he argues, a description of how money works in a modern economy with a sovereign currency, not a political programme or a manifesto for unlimited spending.

A government that issues its own currency, operates its own central bank, has a functioning tax system, and whose currency is accepted in international exchange can never run out of money in the way that a household or a firm can.

When such a government spends, it instructs its central bank to create the necessary money.

When it taxes, it withdraws money from circulation.

Spending precedes taxation; the government does not collect revenue before it spends, it creates money and then recovers a portion of it through taxation.

This, Richard insists, is simply an accurate account of what happens, not a theory in the speculative or contested sense of the word.

The distinction matters because critics frequently characterise MMT as a radical or ideologically driven claim. Richard argues the reverse: it is the conventional household analogy, the idea that a government must earn or borrow before it can spend, that is the ideological imposition, and a demonstrably false one at that. Understanding MMT, on his account, is primarily a matter of recognising facts that the political and financial establishment have every incentive to obscure.

Why the household analogy is so damaging

Few themes recur more consistently in Richard’s writing than his critique of the household analogy. The claim that governments must live within their means, in the same way that a household balances its income against its outgoings, has been deployed for decades to justify austerity, suppress public investment, and conceal what are in reality political choices behind the appearance of economic necessity. Richard regards this framing as not merely misleading but actively harmful: it has sustained underinvestment in public services, suppressed wages, allowed infrastructure to decay, and eroded public trust, not because resources were genuinely unavailable, but because a false story about financial constraint was used to make those outcomes seem inevitable.

The key difference between a government and a household is that a government issues the currency its citizens use, while a household merely uses what others have issued. A household that spends more than it earns must borrow from someone else. A currency-issuing government that spends more than it taxes creates additional money; it is not borrowing from the market in any meaningful sense when it issues bonds, since bond issuance is a policy choice, not a financial necessity. The Bank of England cannot refuse to honour a cheque drawn by the Treasury. This is why Richard characterises the “we can’t afford it” argument, when applied to a sovereign currency-issuing government, as a political tool rather than an economic truth: it ends debate and disguises power, but it does not reflect reality.

The real constraints: inflation and real resources

Richard is emphatic that recognising the government’s capacity to create money does not mean spending without limit or consequence. The real constraint on government spending is not financial but physical: it is the productive capacity of the economy, including available labour, skills, energy, materials, and ecological limits. When a government spends into an economy that has genuine idle capacity, it puts people and resources to work without generating inflationary pressure. When it spends into an economy that is already at or near full capacity, it creates inflation, because additional money is chasing a supply of goods and services that cannot readily expand.

This understanding, Richard argues, makes MMT not indifferent to inflation but centrally concerned with it. The primary tool for managing inflation within an MMT framework is not the interest rate, as neoliberal orthodoxy would have it, but fiscal policy, and taxation in particular.

Taxation is not, on the MMT account, the means by which the government funds its spending; it is the means by which excess money is withdrawn from the economy, demand is managed, and inflationary pressure is contained.

This reframing is, Richard believes, enormously consequential. It means that decisions about taxation are decisions about economic management and about who bears the cost of controlling demand, not simply decisions about revenue.

It also means that the use of high interest rates to create unemployment as the primary mechanism for controlling inflation, which is standard practice under neoliberalism, is both economically unnecessary and morally unjustifiable.

MMT and its relationship to Keynesian economics

A question Richard addresses repeatedly is the relationship between MMT and the Keynesian tradition that has been dominant on the centre-left since the 1930s. He acknowledges that both frameworks reject the neoliberal instruction to leave everything to markets and both assign government an active role in managing aggregate demand. The differences, however, are significant.

Keynesian economics developed in the era of the gold standard, when governments were genuinely constrained by the need to maintain fixed exchange rates and could not freely create money. It therefore retained the assumption that governments must tax and borrow before they can spend, treating money as inherently scarce.

MMT, by contrast, describes a world of fiat currency, where that scarcity is not real but institutional, and where the government’s relationship to money is fundamentally different from that of any other actor in the economy.

Keynesianism also, on Richard’s reading, tends to treat the deficit as a temporary and ultimately undesirable feature of crisis management, to be reduced when conditions allow.

MMT, by contrast, sees the government deficit as the private sector surplus: when the government runs a deficit, it is, by accounting necessity, adding net financial assets to the non-government sector. This insight, associated with the sectoral balances framework developed by the Cambridge economist Wynne Godley, is central to Richard’s thinking. It means that the pursuit of a balanced government budget, as an end in itself, is not fiscally responsible but potentially destabilising, as it removes the financial assets the private sector needs to sustain saving and investment.

The political significance of MMT

Beyond its technical content, Richard argues that MMT carries profound political implications. If governments genuinely understand that they are not financially constrained in the way households are, the entire rationale for austerity dissolves. Unemployment is no longer an unfortunate necessity but a policy choice; idle resources are not an irreducible feature of the economic landscape but evidence of a failure of political will. Power shifts away from financial markets and the City of London, which have benefited enormously from the pretence that governments depend on them for funding, and towards democratic institutions, which could use that funding capacity to serve public needs.

Bond vigilantes, the investors supposedly poised to punish governments that spend too freely, Richard regards as largely mythical, or more precisely as a convenient fiction. When governments have needed to spend, as during the financial crisis of 2008 and again during the COVID pandemic, quantitative easing demonstrated that the central bank could always provide the necessary resources. The bond market’s apparent power rests on governments choosing to behave as if they were financially constrained; it evaporates when they choose otherwise. The real constraint, Richard argues again, is always real resources and inflation, not the willingness of investors to lend.

The job guarantee debate

One of the more nuanced positions Richard has developed in recent years concerns the job guarantee, a policy proposal closely associated with mainstream MMT thinking. The job guarantee proposes that the government should act as the employer of last resort, offering a publicly funded job at a fixed wage to anyone willing and able to work, thereby eliminating involuntary unemployment and providing a price anchor for the economy.

Richard is broadly sympathetic to the goal but sceptical of the specific mechanism. He argues that the job guarantee, as typically conceived, is administratively unrealistic, likely to be poorly paid, and capable of undermining the dignity it claims to support.

More fundamentally, he contends that the state need not create a standing pool of emergency jobs because it already has the capacity, through direct public employment, investment in care, housing, the health service, and the green transition, to deliver full employment by more effective and durable means. The UK state did something functionally equivalent in the postwar decades, not through a formal job guarantee scheme but through a comprehensive programme of public investment and social provision.

Richard also takes issue with the theoretical grounding sometimes offered for the job guarantee, particularly the claim that it is required by MMT’s own logic because it provides the only means for people to obtain the currency needed to settle tax obligations. He rejects this: MMT makes clear that money is created by government spending and recovered by taxation, and the state already distributes income through pensions, social security, and other transfers. The job guarantee is, in his view, one policy option consistent with MMT, not a necessary or uniquely valid expression of it.

MMT and the politics of the present

Richard has become increasingly insistent in recent years that MMT is not merely an academic curiosity but the appropriate economic framework for the challenges of the current period. Neoliberalism has, by its own terms, failed: it has delivered financial crises, high inflation, suppressed wages, and underinvestment in every dimension of social and physical infrastructure. The premise that markets, left largely to themselves and disciplined by an independent central bank raising interest rates to maintain a pool of unemployment, will deliver optimal outcomes has been comprehensively tested and found wanting.

MMT, by contrast, offers a framework in which governments can respond to the actual problems people face: unemployment, inadequate public services, the climate emergency, and the urgent need to invest in a sustainable economy. It does not promise free lunches; it insists that spending must be matched to real capacity and that inflation must be taken seriously. But it does refuse to accept that the limits on what governments can do are financial rather than physical and political. That refusal, Richard argues, is both intellectually honest and practically essential if democratic governments are to regain the capacity to act in the public interest.

Reading list

• “Modern Monetary Theory, mythology and a glossary update”, 26 November 2025.
• “Why is modern monetary theory so important?”, 17 September 2024.
• “What is modern monetary theory?”, 7 September 2024.
• “MMT: Magic, myth or reality?”, 22 June 2025.
• “The truth about modern monetary theory”, 19 August 2025.
• “Keynes vs MMT: which economic theory fits our world?”, 2 September 2025.
• “The MMT toolbox and why it matters”, 23 December 2025.
• “MMT questions”, 21 December 2025.
• “Does MMT say we can spend without limit?”, 5 May 2024.
• “Why the government is nothing like a household”, 23 November 2025.
• “Governments aren’t like households”, 13 August 2025.
• “Are bond vigilantes really in control?”, 5 June 2025.
• “MMT v neoliberalism: there is only one winner”, 15 April 2026.
• “The job guarantee is not an MMT panacea: it’s just one policy option”, 2 April 2026.
• “New glossary entry: the job guarantee”, 29 March 2026.
• “The Job Guarantee and MMT: A Conversation with Will Thompson”, 22 April 2026.
• “Modern monetary theory: an explanation”, 18 April 2023.
• “Quantum economics, part 6: Infinite Promises, Finite Energy (MMT and constraint)”, 12 September 2025.
• “The Taxing Wealth Report 2024 and modern monetary theory — again”, 23 April 2024.
• “The worst attack on MMT, ever?”, 11 May 2026.

About Richard Murphy

Richard Murphy is a political economist, emeritus professor of accounting practice at Sheffield University Management School, a former professor of international political economy and, for 42 years, a practicing chartered accountant. He is one of the UK’s most widely read heterodox economics bloggers. He is the author of the Funding the Future blog and runs the Richard J Murphy YouTube channel, which has more than 370,000 subscribers. He co-founded both the Tax Justice Network and the Green New Deal.

You can find Richard at:

• Blog, Funding the Future blog
• Twitter/X, @richardjmurphy
• Bluesky, @richardjmurphy
• YouTube, Richard J Murphy YouTube channel

That process, which has been heavily influenced by the involvement of Thomas and James in the production processes of my work, has looked at questions around:

• what we are doing,
• why we are doing it,
• how we best communicate,
• how we reach different audiences,
• how we make the work more accessible, and
• how we fund this work on a resilient basis.

This has challenged all of us to come up with new answers, having recognised that not everything we are doing is working to the best effect.

Having reviewed some of these issues, we also identified some specific current weaknesses.

That process started with a recognition that our podcasts were undermining our channel’s reach on the YouTube algorithm, which is why we have not done any for the last few weeks. The likely response is that such content will move to Substack soon, on which subject I will have more to say soon. John Christensen and I are discussing making a series on capitalism for that channel.

We then recognised that there are real issues with this blog and its current structure that need to be addressed, which will probably require, in the end, a complete redesign, as this version of its design is now nine years old.

The search problem

A particular problem that we found with the blog is something of which we have been aware for a while, but which has challenged James as he takes on a more editorial role within the work that we do, which is in finding just what I have written on a subject before now, and what the key messages on any topic that I have discussed might be.

Our existing search engine is based on search techniques that almost nobody understands or uses these days, and the consequence has been that the content of more than 25,000 blog posts has become largely inaccessible. This, as he has pointed out with some frustration, has made it a seriously underexploited resource.

As a result, we explored improving the blog's search facility, and there are AI-powered search engines available for this purpose, which would be considerably easier to use than the one we currently have, but they are also expensive. The likely cost of integrating them would, in search cost terms, come to potentially thousands of pounds a year.

That then linked straight into our funding question because we are funding the whole of this operation on a financially marginal basis at present. That means that it does cover its costs right now, but only on the basis that any surplus it happens to make represents a rate of return to me on expenditure of effort of considerably less than the statutory minimum rate of pay for the time involved.

Admittedly, I now have a pension, which means I am not looking for a significant financial return from this activity, but equally, I cannot afford open-ended risk, which such a search facility could create, so we looked for another way to access the archive.

This is a slightly long way of introducing another post that I will be publishing this morning, which is entitled ‘Richard Murphy’s View on Modern Monetary Theory’.

This has been written in the same AI-assisted way that the AI-assisted Economics Questions series was generated, although with the twist that all the source material used was entirely drawn from this blog by treating it as a large language database in its own right.

The resulting post is written in the third person, analysing my work from that perspective, as this piece, and others in a series that might follow if this one is thought to be of use, are intended for sharing and outreach, as well as explanation and, to some degree, as a replacement for a search facility.

The prompt that generates the post is absurdly long, and the output is, of course, subject to editing and checking. These are processes in which Jacqueline and James are involved before I give it a final once-over. We are using Claude AI for this purpose. Although the prompt was initially developed in ChatGPT, it turns out to work much better on Claude.

What happens next

Our aim is that all of these posts will be available in due course as formatted PDF files. When this blog is redesigned, they might get an organised home here. In the meantime, they might get a home on our Substack site, which James is now developing. If it ends up looking like Robert Reich’s, so be it.

The question is, is this post useful? Would a series of such posts be useful? So far, I have about 90 draft titles. I am open to more. And would PDF downloads from a neatly organised archive also help? Comments would be welcome. So would answers to this poll, and thanks in advance.

The three failing wars — and what each one proves:

• Russia invaded Ukraine and expected victory in days and got years of war, catastrophic casualties, massive equipment losses, and an economy permanently distorted, with Ukraine still undefeated.
• The USA attacked Iran to supposedly eliminate its nuclear capability on 28 February 2026; three months later, Iran's government is intact, its military is intact, its population has not surrendered, and the Strait of Hormuz is closed.
• Israel invaded Gaza in October 2023. Tens of thousands of Palestinian civilians have been killed, genocide and ethnic cleansing have happened, and yet Hamas is not destroyed, there is no functioning administration, and there is no peace, nor any sign of when it might be achieved.

What the pattern tells us:

• Military superiority no longer translates into political victory.
• The post-war military-industrial complex that was built on the assumption that overwhelming force would produce military resolutions to conflict is failing in real time.
• Every one of these conflicts has increased instability, and not reducing it.
• The UK is now committed to spending 3% of GDP on defence, with no coherent explanation of what political outcomes that spending is supposed to achieve.

What actually works and what the UK should be promoting is something quite different:

• Diplomacy, international law, and multilateral institutions have delivered durable peace where military force has not.
• The post-war European settlement, built on economic integration and institution building, not rearmament, is the model that worked
• Patient negotiation and the politics of care are not weaknesses; they are now the only approaches to conflict resolution with an evidence base.

The UK is sleepwalking into a 3% GDP defence commitment at the precise moment three superpower militaries are demonstrating that military spending does not win wars. This video asks the question Westminster refuses to ask: what is it actually for?

This is the audio version:

This is the transcript:

UK politics is distracting us right now, but the world beyond our borders is not waiting for us to catch up, and we should be paying attention still.

And maybe the biggest issue we should be looking at is the fact that three major military powers are stuck in conflicts right now, and they cannot win them. That fact carries enormous lessons for all of us. But those lessons are being ignored by the people making decisions right now. This video is about what those lessons actually are.

Russia, the United States and Israel are all trapped in military impasses at this moment. None of them can convert their military superiority into political victory. And I’m suggesting that this is not a coincidence; it is a pattern.

The pattern is consistent, repeated, and damning. At its most basic level, the military-industrial complex of the post-war era is failing. It promised to impose power by threat, and now its threat is shown to be hollow, and almost nobody in mainstream politics is drawing the obvious conclusions from that.

Putin launched his invasion of Ukraine in February, 2022. He expected a rapid victory. Russian doctrine, propaganda and intelligence all assumed that Ukraine would collapse quickly. More than four years later, Ukraine has not been defeated. It has lost some territory, but the war is now a stalemate. And in the meantime, Russia has suffered catastrophic casualties and equipment losses. Its economy is becoming totally distorted by a permanent war footing, with this war now having lasted longer than the Second World War did with regard to Russia, and the outcome, at enormous human cost, remains a stalemate, and Russia increasingly looks to be on the back foot.

Trump launched his war on Iran on 28th February this year, 2026. The stated objective, as much as there ever was one, was to eliminate Iran’s nuclear capability. Nearly three months later, there is no surrender, no settlement, and no stable outcome, and no sign that anything of that sort will be achieved in the foreseeable future.

Iran’s government remains intact despite all the casualties imposed upon it by Israel and the USA. Its military is not broken and still appears to be well equipped, and its population has not capitulated.

Military strikes have produced danger and uncertainty; there’s no doubt about that, but there has been no resolution. For Trump, the situation in the Gulf is now worse than when he started. When he started, the Strait of Hormuz was open; now it isn’t, and the world is in crisis as a consequence.

And then let’s look at Israel. Israel launched its Gaza offensive in October 2023 after the attack by Hamas on its territory, and it did so with overwhelming force. By May 2026, it has killed many tens of thousands of Palestinian civilians, has committed a genocide and an ethnic cleansing, but Hamas has not been destroyed as a political or military force, and there is no functioning administration in Gaza to replace it.

That’s a critical point. There is no peace, no security, and no credible end state, whatever Trump, Tony Blair, and anybody else might like to say. Military superiority has produced trouble in Gaza, but it has not produced a resolution, and yet again, there is none in sight.

What does it mean then when the most powerful military states cannot win wars anymore?

Is the question that should be dominating political debate right now, but it isn’t, and yet the answer has profound implications for how we organise our security.

It challenges all the assumptions that have driven Western policy for decades. Those assumptions are now demonstrably and repeatedly wrong. That model of military power assumes conventional superiority would produce geopolitical control, and yet it isn’t. The evidence of that is now overwhelming.

You can destroy infrastructure and still not subdue a population. That is what we have now learned.

You can launch precision strikes and still not achieve your political objectives, even if you can take out a head of state.

Vietnam provided us with lessons like this more than 50 years ago. I remember it, and Afghanistan has done so over many years since then. Continuing not to learn now is a choice and not an oversight.

And yet, despite all this, the UK is committed to raising defence spending at this time, hoping to increase it to 3% of GDP without ever explaining why that is a magic number or what goal will be achieved as a result.

At the same time, Germany is re-arming, and Europe’s entire political conversation has shifted towards defence expenditure, but nobody knows why or what they’re going to buy.

The premise is that more military capacity will produce more security, and yet that premise is exactly what the evidence of recent decades completely refutes. Those demanding more spending owe us a clear answer, is my point. How precisely does this spending produce the outcomes being promised when the evidence says it can’t?

If military force cannot deliver political outcomes, the point I’m now making is that we need to look for other solutions. Doing so is practical and not soft-headed.

Diplomacy, international law and multilateral institutions, as well as patient negotiations, have actually produced peace in recent decades.

The post-war European settlement was built on economic integration. It was built on institution building, and it was built upon sustained political work. The evidence that it worked is there for all to see. We have moved away from military solutions to disputes inside Europe, and that model has delivered decades of stability. The EU is, in many ways, the extraordinary everyday legacy of that for all its faults; and yes, it’s got them.

So what we have are two things. Evidence of models that work, which are peaceful, and evidence of models that don’t work, which are violent. But despite that, calling for more weapon spending is the easy course of action. It is the default political move still. It is what the political class does when it has no idea what else to do, but it won’t work because it hasn’t worked.

In this situation, then, real courage would represent calling for fundamentally different ways of organising the world. The current approach is failing visibly, repeatedly, at catastrophic human cost; we should be honest about that.

But let’s also be clear, being stuck is not only a crisis, it is also an opening. Russia, America, Israel, and maybe China, let’s not forget them; they might also reach an impasse if they tried to do something stupid, are not omnipotent then, whatever their rhetoric suggests. Their failure to win creates space for a different kind of politics. The argument for diplomacy and multilateral solutions now has the evidence behind it, and they are, of course, key to our politics of care.

I keep on talking about care, but I mean that it’s important. What we are seeing is that the lack of care in the military sphere and a belief in the power of violence is failing us. I’m now saying it’s time to believe in people, in talk, in negotiation and peace, and that way we could deliver a politics that really works and a politics that really cares.

That’s what I think. What do you think? There’s a poll down below. Please leave us your comments. Please like this video if that’s what you do. Please share it because that helps us with YouTube, and if you’re so inclined and you would like to leave us a donation, there’s a link down below to help you do just that.

Poll

Let’s summarise the situation. Keir Starmer was the Prime Minister in the morning. Keir Starmer was the Prime Minister in the evening.

At lunchtime, Wes Streeting resigned as health secretary but did not mount a leadership challenge. I am quite sure that was for two very good reasons.

The first is that he does not have the support required from Labour MPs to start a leadership challenge.

The second is that he has, like everyone else, read the opinion polls on this issue, which I shared here yesterday, which show that he has almost no chance of winning a Labour leadership election and, as a consequence, resigned to save face but did not start a leadership challenge because he knows there is no way on earth that he could win it.

In that sense, yesterday resolved a question. Streeting is not going to be the next leader of Labour.

Then, in the late afternoon, Josh Simons MP, one of the most unsavoury people, in my opinion, to have become a Labour MP in recent years, resigned his Makerfield seat in Manchester to provide Andy Burnham with a chance of standing to win that seat in a by-election, opening the route for Burnham to become Labour leader if he could then successfully raise a challenge to Keir Starmer.

There are, it should be pointed out, an enormous number of conditional factors implicit in this process.

First, Labour has to let Andy Burnham stand, and they did not earlier this year, and may not do so now, although Starmer has apparently changed his mind and will let him run.

Second, Burnham has to win the by-election, and there is absolutely no guarantee that he will do so. He might have won in every single ward in the constituency in the last election in which he stood for mayor of Manchester, but the simple fact is that, in the recent council by-elections, every single ward in the seat voted Reform on a first-past-the-post basis. What is more, the Labour majority in the seat has been going down for decades. Makerfield was once a safe Labour seat, but now looks to be decidedly marginal. Whether Labour can win here now is very uncertain, and any serious vote for the Greens would seriously upset Andy Burnham’s chances, and that vote is a possibility given the recent result in Gorton and Denton, also in Manchester. There is, then, no straight route back to Parliament.

But, presuming that Burnham could get to Parliament, he would still need the support of 81 Labour MPs. He appears very confident of that. Then, and only then, it seems, could he stand for the Labour leadership. Starmer says he will also stand in any such election, and I think it would be most unwise to rule out the possibility that someone else would as well.

Given how impossible the situation for Wes Streeting is now, there are only two such choices. The first is Angela Rayner, but she appears to be a much diminished person as a consequence of her problems over stamp duty and subsequent resignation as a minister and deputy Prime Minister. I cannot see people rallying around her.

What I do not rule out is a run from Ed Miliband. Why? Because Andy Burnham is undoubtedly from the right of the Labour Party, although people like to call him soft left, and his track record is not good, nor are the current associations that are letting him stand.

He voted for the Iraq war way back in the Blair era. As health secretary in 2009, he was involved in NHS privatisation, which is not a good sign, nd the fact that Josh Simons has resigned for him does not look good.

Josh Simons ran Labour Together before entering parliament. This entity was, of course, closely associated with the rise of Morgan McSweeeney and was fined by the Electoral Commission for fundraising activities that it did not declare during his era. Simons appears to have been his chosen successor, and whilst he ran it, the organisation ran investigations into campaigns against left-wing journalists criticising the Labour Party, whilst Simons is closely associated with Labour Friends of Israel. He is, then, incredibly close to the Mandelson / McSweeney project, of which his resignation just feels another part.

That then suggests that Andy Burnham is nothing more than a continuity candidate, and a straight replacement for Starmer.

Certainly, when he stood for leader in 2015, he said and did nothing to make him stand out from the bland opponents of Corbyn at that time.  His policies, his economics, and his offerings were all truly neoliberal to their very core. He was deeply critical of the economic ideas of mine that Corbyn used to help him secure his win.

Would Miliband stand against Burham then? I genuinely don’t know, but my point is a very clear one. If he doesn’t, I doubt that anybody from the left (if we can still describe Ed Miliband as being on the left of the party) might do so, and this leadership contest will do nothing to save the party, its election prospects, or prevent its demise.

And all of this speculation assumes that Burnham can beat Reform now. If he can’t, Miliband might get a run, and he is certainly a better prospect than Burnham, but the scale of the challenge from Reform would then be known and be decidedly sobering, at least as far as Labour is concerned, because in that case, everyone would know that voting for Labour would be no way to beat Reform.

We are set for a few interesting weeks of politics. What we are not set to get are answers to any real questions, or an understanding of where politics might be going beyond the fact that it looks like Labour remains in its death throes and has no way to shake them off.

In this video, I explore why Trump’s government increasingly looks like a government of billionaires for billionaires, detached from the economic reality facing ordinary people. Rising food prices, fuel costs, inflation, shortages and supply chain failures are becoming real pressures across the world, and yet those at the top appear indifferent to the consequences.

I argue that this is not simply about Trump as an individual. It is about the endgame of neoliberalism itself. A political and economic system built to transfer wealth upwards is now failing economically, politically, socially and even militarily. The warning signs are everywhere: disrupted trade, shortages, financial instability, rising insecurity and growing public anger.

The question now is what comes next. Can politics based on care, security and well-being replace a model built on extraction and inequality before the damage becomes irreversible?

This is the audio version:

This is the transcript:

Every now and again, Donald Trump almost says something that’s true. Now it’s very rare. Most of the time, I don’t believe a word he says. I doubt that he believes a word he says, but sometimes, just occasionally, something slips out, and this week it did.

He said he did not think about the financial position of people in the USA when considering his strategy on the war with Iran. Now, that was an astonishing admission; an admission of utter indifference to the well-being of the people of the USA, and on this occasion, I think we should believe every word that he said.

Trump is arguably the richest man ever to hold the US presidency. He has used his second term to considerably enhance that wealth; that we know. He and his sons have been involved in the most massive amount of trading to improve their financial positions. And his cabinet already contains more billionaires than any other in US history. Patterns of insider trading, now becoming very clear before every one of his press announcements, suggests that those who aren’t yet billionaires are intent on becoming so. And this then is a government of the wealthy, by the wealthy, for the wealthy.

Ordinary Americans are simply not part of the Trump world. Trump and his cabinet are totally detached from ordinary economic reality, as most Americans and most people around the world would see it. They can only identify with tech billionaires who backed and funded them.

Rising food and fuel prices are beyond Trump’s imagination as a result, and whatever he spends on either, the impact on his well-being is so small that he does not understand that for most Americans, the inflation that he is creating is a real pressure on their well-being.

He doesn’t realise that Americans are terrified of inflation, job losses and recession, and he is not. That is the difference between Trump and his electorate. That is what is going to break the MAGA regime.

And none of this is an accident. What is happening is the logical endpoint of neoliberalism. That system was always designed to extract maximum value from working people and to reallocate it to a tiny elite who could claim they were worth it, as the saying goes. Now we can see that not only are they not worth it, but that by pursuing this agenda, they are destroying the American economy, and with it, that of much of the rest of the world.

The warnings that I’ve given on this channel about forthcoming shortages are now being borne out in real time. What we are seeing is that absolute shortages of fuel and food are emerging, and these will be hitting us from mid-June onwards. They are already hitting Southeast Asia; we know they are coming.

At the same time, business supply chains are already becoming disrupted, and the warning signals are flashing everywhere about the fact that this is going to get very much worse.

And it’s not just in the obvious businesses that we are seeing this. You’d think about oil, you’d think about food, but the most recent warning is with regard to insulation materials and paint, both of which are delaying shipbuilding. The crisis is going to emerge everywhere.

Businesses will begin to fail as a result during the autumn, and the banking crisis that I have forecast is going to develop as a consequence, whether we like it or not, unless Trump gets back to the negotiating table, and that’s not very likely.

The sequence I’m talking about is not speculation now. It is already visible, and it is highly likely to see its way through to the end.

And in that case, let me make one warning: never underestimate the anger of a mother who cannot feed her children. Faced with that situation, most people, most especially mothers, will do almost anything to feed their kids. That is a reality. Their children matter to them more than anything else in the world, and they will not see them go hungry. That’s when we get societal breakdown. The risk is that it may happen.

Steve Keen is talking about world food shortages of up to 20%. I think he may be overstating it a bit, but the reality is, there is going to be real suffering as a consequence of food shortages, and that is the crisis that we face. And this reality is going to hit the USA, the UK, the whole of Europe, and we are already beginning to see it in Southeast Asia. There are food shortages there already. Anyone who does not understand this is out of touch with reality, and that includes the man in the White House.

Is Trump worried about any of this? I take him at his word. He is not.

What he is worried about is losing face over Iran. The fact is that having to stand down there will be the biggest strategic US military defeat in history. It is fear of that which motivates him and not fear of the suffering of his own people. The gap between his priorities and theirs could not be wider, and that gap is now a danger to all of us.

What the evidence shows is that neoliberalism has reached its endgame. It cannot deliver on its own promises, not even to those it claims to serve. It can’t even deliver victory in war anymore.

In pursuing wealth and power for an elite, it is destroying the societies it governs. People are already beginning to reject this political philosophy as a consequence, and the USA is heading for both an economic and a political crisis, and that will hasten this rejection. The UK, Europe, and many others will follow in that wake, and this then is the moment when we need to talk seriously about what happens next.

The politics of care is, of course, the answer, but the road to it will be painful. There is going to be a great deal of suffering because of Trump’s indifference to the people of the USA and the world, and that suffering is the direct consequence of the choices made by people like him and by all those who supported and enabled him.

The question now is whether we can build something better before the damage is complete. That’s what I’m asking myself. That’s what I’m hoping for. I don’t know whether we can; I fear the consequences of Trump and his indifference, but what about you?

What do you think? There’s a poll down below. Let us have your opinions. Please like this video if that’s what you do. Please share it, and if you’re so inclined and would like to give us a donation towards the cost of doing these videos, we’d be very grateful.

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Our topic? Who might lead Labour. We came to pretty much this conclusion:

He put Burnham above Miliband. I did it the other way around.

Thereafter, our ranking was the same.

Our mutual loathing of Wes Streeting was agreed upon. We were absolutely agreed that Starmer was better than Streeting. It is good to see the Labour membership agree.

He might have chosen to trigger this election, but I sincerely hope he comes last.

If Keir Starmer is toppled, key Labour power brokers believe it wise to keep Rachel Reeves as chancellor, to reassure nervous City investors.

There, in a nutshell, is all you need to know about why Labour should not be governing.

As I argued earlier this week, Labour is now in office to keep bankers and not workers happy. And that is why it needs to go.

Government should never be run for the interests of finance and not people, but Labour now believes the City comes first, proving why it has long since passed its usefulness.

Britain’s economy expanded in the first three months of the year despite the outbreak of the Iran war at the end of February, official figures show.

The UK’s gross domestic product (GDP) grew by 0.6pc in the first quarter, according to the Office for National Statistics.

It was in line with analyst forecasts and up from 0.1pc in the final quarter of 2025.

This framing is quite ridiculous. Maybe they have already forgotten, but the impact of events like war takes time to work through into the real economy.

Maybe they will also have forgotten that by the end of March, almost no one in mainstream media had realised the full implications of this war, or the scale of the shortages it will create, or the economic mayhem it will cause. At the end of March, the general expectation was that the Strait of Hormuz might reopen again soon, even though there was no evidence of that, and some of us were saying that mayhem was likely. So, of course, this war had caused little economic damage by then.

It has now. Although mainstream media is still in denial about the mayhem heading our way very soon, there are reports of consumer confidence collapsing and business supply lines looking perilous.

The damage is happening now, and it is going to be very much worse, but the Telegraph has chosen to adopt the "so far, so good" line. That is their right. The only problem is that there is no evidence to back it.