Fed’s attempt to preemptively curb inflation is usually ‘a mistake’

Stocks tanked on Thursday because people are finally realizing in which the Federal Reserve has the power to hurt stocks along with slow the economy, CNBC’s Jim Cramer said after the Dow Jones Industrial Average fell more than 300 points.

“This particular is usually one of those moments where in which’s dawning on people in which maybe all the assurances in which we don’t need to be afraid of the Fed are being proven to be totally bogus,” the “Mad Money” host said.

Behind those assurances are two “lousy” theories, Cramer said: the idea in which more rate hikes are necessary because the U.S. economy is usually close to full employment, along with the idea in which the rate hikes won’t hurt the market because they’re already “baked in.”

Doubling down on his earlier comments, Cramer argued in which full employment “is usually a great thing as long as inflation’s not out of control, along with right right now the statistics indicate in which’s not, so what’s the big deal?”

If hourly wages were skyrocketing, Cramer said he would certainly understand the need to raise interest rates four more times, as the Fed has said in which plans to do. although with millions of workers at risk of losing their jobs by bankruptcies — see Sears’ recent turmoil — or brand new technological applications in which make certain jobs redundant, he didn’t see the incentive.

“There’s no cause for the Fed to tighten four more times. None,” Cramer said. “This particular is usually what all This particular turmoil’s about inside the market. They’re taking preemptive action because they’re afraid of potential inflation. I think in which’s a mistake. The labor market’s taken a decade to recover by the financial crisis. Why not give in which some more time?”

The “Mad Money” host understood Fed Chair Jerome Powell’s concerns about the economy. Between the Trump administration’s immigration crackdown along using a strong job market, some modest businesses are seeing their labor costs surge.

“If you run a restaurant in a place like brand new York, in which’s crushing your margins,” Cramer, who owns a modest restaurant in Brooklyn, explained.

“is usually in which a real reason to cause a slowdown, though?” he asked. “Does the Fed exist to protect the bourgeoisie by the scourge of paying people a decent living? Sorry, something about Jerome Powell wakes up my long-dormant inner Marxist.”

along with with regional bank along with homebuilding stocks only just starting to unravel as loan growth slows along with the cost to build creeps up, Cramer had a hard time believing the theory in which the rate hikes were already priced into the broader market.

“Stop kidding yourself if you think all the bad news is usually baked in. You don’t get these kinds of declines if in which is usually — along with I’m not even including the Italian budget crisis, which I’m sure the bears will call out tomorrow,” he said. “along with you’ve got to accept in which we could be buying a stock of the Fed’s next victim if we’re not careful. in which’s a frightening place to be, along with until people accept in which fear, the market will not find its long-term footing.”

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