Awfully defensive considering I merely posted a comment in jest. Then again, I must not be one of those "real smart" people mentioned in your post as I have the time to sit here and type a response, and have neither a Master's nor a PE. I am a relatively "new" engineer however, yet still find myself gainfully employed with little fear of being dismissed from my job.
To say that companies are only hiring new engineers with Master's degrees is simply incorrect. In fact, the vast majority of new hires in the engineering field do not. There are trade-offs with any sort of post-graduate degree when seeking employment in a struggling economy. If you are able to find work, you may have a slightly higher starting salary. However, for an entry level engineering role, companies may see no need to pay more money for additional education when there is no experience to support it, especially when you've got other candidates coming from the top-tier schools.
If anything, that Master's may give you the nod over another candidate with all other credentials being equal after gaining a few years of experience, but in all likelihood, your starting pay isn't going to change at that point. I WILL be pursuing my Master's in the near future, but only because I am in a field that is typically thought of as exempt and has very little need for a PE. The Master's will simply add credibility to my functioning role in the eyes of the clients and pad my resume, as only a single school in the country even offers a Master's in my field.