We are currently in an environment of extremely low interest rates. The Federal Reserve is conducting the loosest monetary policy in decades. The 9.6 percent unemployment rate is the highest it has been since 1982. The government continues to expand, with the budget deficit recently hitting its all-time high of $1.4 trillion. Inflation expectations have risen sharply in the past two weeks due to the Fed's announcement of a second round of quantitative easing or pumping more money into the economy.
To cut a long story short, there is a lot of stuff to spend your money on at the moment, but most of us don't really have any of that cash. Some people (6.1 million Americans) are unemployed and thus earn no regular income. Others are trying to avoid foreclosure, struggling to repay their mortgages. And, of course, Wall Street bonuses have risen 17 percent since 2009.
In the next 24 months or so, my belief is that the situation will completely reverse its poles. Households will possess a plethora of cash. Consumers will be more than willing to get rid of that liquidity. And they will. The abundance of money in the system will drive the prices so high that everything will suddenly begin to seem extremely expensive. It turns out that spending is problematic both when you are poor and "rich."
The key element of economic recovery is consumer spending. That is the driving factor of a country's gross domestic product one of the major indicators of economic growth. If we don't spend, it's quite possible that the U.S. economy will drop into a double-dip recession. And that means higher unemployment, less income and even less spending. If we spend too much, however, the prosperity won't last for very long since the inflation will swallow any real gains. While it's hard to predict every single economic aspect, one thing remains certain: regular people will likely be hurt regardless of which scenario plays out.
How does all this economic nonsense relate to you, a normal Dartmouth student? Just like you, I am totally and irreversibly consumed by the "Big Green" bubble. Despite coming here only 7 weeks ago as an exchange student, I am already starting to slowly but surely detach from reality. Readings, sports, frat parties, exams, Homecoming However, there actually is a world outside of Dartmouth, and as you can deduce from my analysis thus far, it is currently in a very hostile state. College is truly a memorable experience for all its traditions and specialties, but the real purpose of our stay here is to get ready to storm the real world while maintaining a certain Dartmouth flavor in doing that, of course.
It can only be natural to think that such economic preparation is especially relevant to seniors. Indeed, seniors must not only survive advanced-level courses but also pass through the tiresome and immensely time-consuming processes of a job search and/or graduate school applications. By the time one is researching an employer or a graduate school, however, some career path is in mind (or should be anyway). In fact, selection of a career path depends on two things: The student's field of specialization and his or her knowledge of that field, and the overall conditions of the current economic environment (including labor market, growth prospects, interest rate, inflation expectations and even the political environment).
For example, imagine a student at a top medical school. He works very hard for many years to become a professional physician. He ranks at the top of his class and is one of the hottest recruits on the market. However, unfamiliar with the implicit effects of the recently passed healthcare bill (which established publicly-financed insurance), he will soon realize that the real world is quite different from how he was visualizing it to himself in the classroom. Healthcare reform has established minimum prices for treating patients secured under the public option, forcing physicians to charge publicly insured patients up to 30 percent less. The classical "saving lives" dream is in fact more like a mass-production assembly line where doctors have to be treating a lot more patients just to generate the same income.
Choose whatever specialization you want, be very good in it, but also make sure you are aware of how the state of the real world can affect your own future. No matter how distant and irrelevant it may seem, you too will soon be out there, spending and working and living.
