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Inflationary monetary supply enabled by the federal reserve... lots of talent with large salaries. This sounds like a villain-hunt: a well-known cognitive bias

Inflationary monetary supply enabled by the federal reserve... lots of talent with large salaries. This sounds like a villain-hunt: a well-known cognitive bias that seeks to explain circumstances in terms of human agents with simple, understandable motivations to the exclusion of environmental, structural, or probabilistic explanations that lack such features. In this case, while I'm sure the Fed bears some responsibility, a lot of the growth of the financial sector over the last 30 years is probably due to the fact that several billion Asians have entered the world economy in that time. Their work creates wealth, which is useful as capital, for which there are markets, which grow from the influx and thus offer larger rewards to clever people who work in finance, should they find a better/faster/more efficient way of getting things done.

noelchurchill 17y ago
The Fed began expanding the M3 monetary supply at a historically unprecedented rate in the 80s, and has become more and more aggressive with this policy over time. The entire point of this policy is to stimulate business by encouraging spending, make credit more attractive because the value of debt loses value over time due to inflation, and discourage saving. As consumers spend more, businesses make more, sending signals to the job market that getting into business and getting an MBA is a really good idea because you make more money. So that's exactly what people have done. Now that the American consumer is tapped out, broke, and unable to take on any more credit, obviously businesses are going to do poorly because their goods aren't being purchased, and they certainly can't afford to hire any more expensive MBAs. Do you agree? A growing and productive world workforce does lead to additional production/wealth creation, and I do think this is conducive to business, but I don't think it's the significant factor explaining the current glut in the job market for people with MBAs in the United States. The population in China is still expanding, workforce is growing, and GDP is still booming, so if this were the driving force fueling the demand for MBAs from America then that demand should still be there.

noelchurchill 17y ago

The Fed began expanding the M3 monetary supply at a historically unprecedented rate in the 80s, and has become more and more aggressive with this policy over time. The entire point of this policy is to stimulate business by encouraging spending, make credit more attractive because the value of debt loses value over time due to inflation, and discourage saving. As consumers spend more, businesses make more, sending signals to the job market that getting into business and getting an MBA is a really good idea because you make more money. So that's exactly what people have done. Now that the American consumer is tapped out, broke, and unable to take on any more credit, obviously businesses are going to do poorly because their goods aren't being purchased, and they certainly can't afford to hire any more expensive MBAs. Do you agree? A growing and productive world workforce does lead to additional production/wealth creation, and I do think this is conducive to business, but I don't think it's the significant factor explaining the current glut in the job market for people with MBAs in the United States. The population in China is still expanding, workforce is growing, and GDP is still booming, so if this were the driving force fueling the demand for MBAs from America then that demand should still be there.