25th Hour
This is a random question, but can someone explain to me this scene in 25th Hour? I saw it but I still don't understand. They said there was supposed to be a high unemployment #, then the trader told the clerk that more jobs means fewer people looking for work, which means you have to raise wages to get good people and inflation goes up.
If unemployment goes up, more people are looking for jobs and as such, you can lower wages, or did I COMPLETELY misunderstand something?
Here is the link, I know it's a strange question but this has been baffling me for awhile now.
Historicaly there has been an inverse relationship between inflation and unemployment. The guy in the movie gives a Keynesian explanation.
"As opposed to the Classics, who view inflation as a problem of ever-increasing money supply, Keynesians concentrate on the institutional problems of people increasing their price levels. Keynesians argue that firms raise wages to keep their workers happy. Firms then have to pay for that and keep making a profit by subsequently raising the prices. This causes an increase in both wages and prices and demands an increase of money supply to keep the economy running. So, the government then issues more and more money to keep up with inflation. This differs from the classical model. Classics view changing money supply as affecting inflation while Keynesians view inflation as the cause of changing money supply."
Of all the things you can post about this clip you actually ask about the trading related part. This is one of my favorite movie clips of all time.
"Do the ladies ever tell you that you look like a fucking optical illusion" bwhahahahahahahaha priceless. One of the best quotes ever.
I love that line :D
Even though the position size is totally bogus. 100 million worth of oex contracts? Yeah right.
Quit drinking your red-bullshit...
I find it hard to believe he's long all those OEX contracts betting on a low jobless number...
Siragusa made that movie
The relation between inflation and unemployment is called the Phillips Curve and it had decisively proven to be wrong in the long run in the 1970s by Milton Friedman. In the short run, the cause and effect go the other way round: unexpectedly inflation lowers unemployment and unexpectedly low inflation increases unemployment. The explanation in the movie is bollocks.
Haha I remember when I saw this movie and heard this explanation I thought it didn't make sense
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