Scrum Master Hire??

A Scrum Master without knowledge of Scrum should be incapable of carrying out their primary job responsibility, "promoting and supporting Scrum as defined in the Scrum Guide" (source).  I would love to be a fly on the wall when they made that hiring decision.

For your primary question, I'm not certain, but I suspect it would generally be the executive/management oversight who puts together the team in the first place.  If the Scrum Master has communication and conflict resolution skills, and an understanding of Scrum and Agile practices and principles, what additional input would Developers or Product Owners be looking for in the hiring process?

I've heard some wonderful examples of self-organizing companies - even to the extreme point that there are no managers, and all employees are the co-owners of the business.

I'm not sure exactly how it works exactly, but the traditional model of managers doing the hiring (and firing) does not apply.

I doubt it would work as effectively with traditional business structures; but in the right environment, I see nothing wrong with the rest of the Scrum Team (or Scrum Team + stakeholders) recruiting their own Scrum Master.

Good Question Shane! 

1. Unfortunately the guide doesn't say anything about hiring or budget which causes a lot of doubts.

The hiring should be a requirement from the dev team which should be facilitated by the Scrum Master, so the SM would take this demand for the responsible. This responsible could be delivered to the PO or any management position. 

The stakeholder (sponsor) shouldn't be involved, in my opinion he is only worried about his product and their increments. Some agile experts say that should be the PO, because he should be the one who has control of the budget.

Ok, so what if there are no SM`s yet? It shouldn't. The SM should be chosen before the scrum happens. And it's easier for the Scrum team if the SM's is someone already known, like a dev team member.

2. About the disappointment, in theory (guide) the SM has to be an expert on scrum, his the one who is responsible for the process of the framework, and responsible to guide the organization on scrum practices. 

But, in practice, IN MY OPINION, the most important thing for a SM is his profile. I've read an article which a scrum team hired the secretary of their workplace as SM (she had no knowledge on scrum at all) and they had great experiences.

The thing about the SM is to serve and to facilitate. If the team actually knows what to do, and how to "scrum" they don't even need a scrum master, I would actually go further and say that the SM role becomes obsolete with the maturity of the scrum team. 

SM role becomes obsolete with the maturity of the scrum team. 

I don't think the SM role become obsolete, but it will evolve.

SM role toward the Dev Team will shift from a "high posture" (expert & teacher) to a "low posture" (coach).

SM main focus will shift from the Dev Team toward the global organization. 

But the SM is still very usefull.

Well said Oliver.  The Scrum Master should serve his team as they learn Scrum, grow, and develop.  As they need less attention the Scrum Master should turn his or her attention on removing the impediments of Scrum in the organization...to help Scrum advance throughout the company.

Ok...So Who should ultimately decide on/hires the Scrum Master

The Scrum Guide says:

“Scrum Teams are self-organizing and cross-functional. Self-organizing teams choose how best to accomplish their work, rather than being directed by others outside the team.”

Is there any reason for such a team not to determine who fulfils which role? If others make organizational decisions on behalf of the team, is Scrum being implemented as well as it ought to be?