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Money, Papers, & Careers Money, Papers, & Careers

Money, Papers, & Careers - PowerPoint Presentation

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Money, Papers, & Careers - PPT Presentation

Benjamin Graham Plan for Today Wrapping up Money Your papers Your careers Lecture 12 Money Exchange Rates and Interest Rates Benjamin Graham Interest Rates and the Money Supply ID: 583463

money rates exchange interest rates money interest exchange graham lecture benjamin intelligence job step skills specific people general government

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Slide1

Money, Papers, & CareersBenjamin GrahamSlide2

Plan for Today

Wrapping up Money

Your papers

Your careers

Lecture 12: Money, Exchange Rates, and Interest Rates Benjamin GrahamSlide3

Interest Rates and the Money Supply

If interest rates are low, people borrow more

Money comes out of banks (MB) and becomes cash in people’s hands (M0)

Velocity of money increases

If interest rates are high, people saveMoney goes out of people’s hands (M0) and into banks (MB)Velocity of money slows

Lecture 12: Money, Exchange Rates, and Interest Rates Benjamin GrahamSlide4

Inflation and the Economy (key points)

Low real interest rates stimulate the economy (i.e. cause growth).

Firms borrow money and buy factories, etc

Low interest rates cause inflationThey increase the money supply

However, governments in debt may want inflation for its own sakeFederal Reserve is politically independent

Dual mandate: Keep inflation low and unemployment low

These two things are tradeoffs

Lecture 12: Money, Exchange Rates, and Interest Rates Benjamin GrahamSlide5

The big bad Fed

Politicians are too willing to trade inflation later for growth and low unemployment now

So we don’t want them in control

But the Fed is undemocratic and super powerfulSo Ron Paul is freaked out about that

And they make a good scapegoat

Lecture 12: Money, Exchange Rates, and Interest Rates Benjamin GrahamSlide6

The Volcker Disinflation

Lecture 12: Money, Exchange Rates, and Interest Rates Benjamin GrahamSlide7

Good Money and Bad

A story about bimetalism

Dollars were initially exchangeable for either silver or gold

ratio of 15:1When gold became less valuable in 1849 (gold rush), all the silver coins were melted down and shipped overseas.

Later in the 1870s-1890s, as the economy boomed, the supply of gold expanded too slowly, causing deflation

Lecture 12: Money, Exchange Rates, and Interest Rates Benjamin GrahamSlide8

Iran Step by Step

Step 1: People begin to worry about the Rial

Step 2: People exchange their Rials for dollars

Step 3: Value of Rial falls, value of dollar risesStep 4: Government exchanges a bunch of dollars for rials, restoring the value of Rials

Step 5: The government is worried it will run out of dollarsStep 6: The government passes a law -- no more selling Rials or goods for dollars at below the official exchange rate

Step 7: Gresham’s law: Dollars vanish (under mattresses)

Step 8: If I have Rials, I can’t change them into dollars to import goods. So a shortage of imported goods.

Step 9: Eventually devaluation of the Rial

Lecture 12: Money, Exchange Rates, and Interest Rates Benjamin GrahamSlide9

What happens with devaluation?

Devaluation by another name is inflation

Prices go up suddenly

Food riotsMajor economic problems

Lecture 12: Money, Exchange Rates, and Interest Rates Benjamin GrahamSlide10

What should you do?

You are a well informed economist, and you know the Thai government has only a small foreign currency reserve, but the economy is otherwise very healthy. However, your buddy tells you that an opposition politician is about to go on a talk show and announce that he believes that the government is totally out of reserves and that the currency is about to lose a lot of its value. You think a lot of people will believe him. What should you do?

A. Stay calm and do nothing

B. Bet against the foolish crowd. Put all your assets in Thai Baht.

C. Sell all your Baht. Currency is going down!

Lecture 12: Money, Exchange Rates, and Interest Rates Benjamin GrahamSlide11

Now your papers

Who is brave enough to share their thesis statement?Slide12

Outline

General

intelligence vs. specific skills

Relationships as assetsComplement or Substitute for Computational Power?Finding your way

Notes on grad schoolSlide13

Specific skills vs. high general intelligence

High general intelligence fields: Consulting, investment banking, law

High GPA from an elite university is key here

Specific skill fields: Medicine, statistics, computer scienceLSAT vs. MCATSlide14

Valuable Skills

Are scarce:

Difficult or unpleasant to acquire (or have bad reputations)

Require unique specific talentAre new

Are increasing in demandHow to get them?Classes

Internships

Extra-curricularsSlide15

Certifying your intelligence

Major selection

What majors best signal high general intelligence?

Fellowships and awards matter here.Slide16

Skills you need in general intelligence fields

Two skills

Writing and public speaking

Seize opportunities for public speakingWriting is time-consuming to teach

Don’t pass up someone willing to work with youSlide17

Relationships

Peer relationships

Now and later

Relationships with professors

Office hours are pure goldResearch assistantships Internships

Extra-curricularsSlide18

Finding your way

Active research

Find people who have the job you want (linkedin, career services)

Look at their resumeInformational interviewSlide19

Should I go to grad school?

Mediocre grad schools often cost almost as much as elite institutions

So get into a good one

Invest in good test scoresGet letters of recommendation before you graduate

Don’t take on debt for a masters that doesn’t directly qualify you for a specific jobPh.Ds are free and you can quit after two years with a masters...Slide20

Group Assignment

Pick a job might want when you’re 35.

Specific skill or general intelligence?

What skills/certifications are most critical?How would you get them?

What relationships are most critical?How would you get them?What is the career ladder? List the graduate degrees and prior experience that is necessary to land that job.

Where did you learn what you know about this job?

What else do you need to know about this job and where will you learn it?