Peter Jay Appointed As Ambassador To The USA Controversy

Many readers of this site will doubtless be able to remember Peter Jay, formerly a television celebrity and Zionist fellow traveller.  Born to Labour politician parents, he became a presenter with London Weekend Television in the 1970s, and also worked as a newspaper journalist and diplomat.  He is related to a former deputy governor of the Bank of England, and also to former Tory cabinet minister Virginia Bottomley.  His father-in-law was the Labour Prime Minister James Callaghan, who appointed Jay as ambassador to the USA.

We first became aware of him back in the 1990s when he was the Economics Editor for the BBC, and appeared in news broadcasts as well as on The Money Programme, usually doing person to cameras.
We still clearly recall the first time we saw him on television.  He was bemoaning the fact that the United Kingdom at the time had higher interest rates than Germany, which puzzled me.  Britain at the time had unemployment falling, whereas in Germany the labour market was stagnant.  We expected Jay to address this point, and was astonished when he did not.

We was subsequently to find out that this was a typical Jay performance.  Time and again, his pronouncements would dwell on the assertion that interest rate cuts are good, whereas interest rate increases harm the economy.  He never offered any evidence to support his assertions, and only once did he hint that anything other than interest rates could impact upon the economy.

Banks benefit from interest rates, and in the short term they benefit more from higher interest rates than from lower interest rates.  Interest rates are the price we pay for borrowing money, and in theory they are also the payment we receive for saving.  I say in theory, because not all bank accounts pay interest.  Also, banks routinely charge more interest to borrowers than they pay to savers.

Generally speaking, the higher interest rates go, the wider the gap between interest rates charged and interest rates paid, and consequently the more profits banks can make.  Into this mix can be added fractional reserve lending, whereby the banks lend more money than they actually hold in savings, thereby allowing them to make even more profit.

You might expect therefore that the banks would welcome higher interest rates, and want us to think the same way.  The banks know however that high interest rates deter people from borrowing, and so they want to keep interest rates fairly low most of the time so as to encourage us to borrow.

This is why we should not be surprised that fellow travellers like Peter Jay want us to believe that low interest rates are good for the economy.

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