The Championship side spent around £50m on nine players during the window - more than Champions League winners Real Madrid - but the new arrivals have failed to impress.
Strikers Ross McCormack and Jonathan Kodjia were snapped up for fees that could reach £27m but they have scored just three goals between them while £4.25m Italian keeper Pierluigi Gollini has struggled between the sticks.
"They've so overspent on players," Murphy said.
"Some of the money they have spent on average players is ridiculous, absolutely ludicrous."
Villa are 19th in the Championship table after a woeful start to the season and owner Tony Xia is on the hunt for a new boss after giving Roberto Di Matteo the boot.
Steve Clarke is in caretaker charge and former Liverpool, Tottenham and Fulham midfielder Murphy believes he should be given the job on a permanent basis.
Murphy told talkSPORT: “I like him a lot. He would be a very solid choice, definitely.
"Steve Clarke was very well thought of at Liverpool – I spoke to the boys there and they really liked him.
"He was very unlucky at West Brom, and actually did a good job at Reading, and I think Villa will be doing well to get a someone in better than him."
http://www.dailystar.co.uk/sport/football/551297/Aston-Villa-Transfer-News-Danny-Murphy-Quotes-Gossip