The Fed is in a difficult spot right now because it is so analog. It analyzes the economy from the perspective of the unemployment rate. It isn't looking at it through the lens of anyone under 30 who is looking for a job or anyone over 50 who have been thrown out of a job.
And with the unemployment rate now under 5 percent, Cramer thinks the Fed may feel it must raise rates. It isn't considering the huge number of people that have left the workforce because they have given up.
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"Not only that, but this endless fixation on rising wages, without caveating the numbers by considering that so many states and cities have raised the minimum wage because it's a digitized economy, is ridiculous," Cramer said.
Cramer thinks states must take action, because it is too easy to crush a workforce in a shared economy. In fact, he considers the fixation with stopping the meager wages of the American worker as a justification for higher interest rates to be causing the Fed to turn a blind eye to what really matters.
Cramer knows that the Fed shouldn't only worry about the stock market. But the stock market is signaling slowdowns everywhere, perhaps because it recognizes that the Fed might act too soon in raising rates.
"There is so much that needs to go right for us to get a bottom in stocks, but I still think it starts with the Fed," Cramer said. (Tweet This)
So, stay tuned. Cramer thinks if Yellen gives clarity on Wednesday and confirms that the Fed will stay data dependent and it is too soon to raise rates — it could trigger the rally many have been waiting for.
Yellen is that important to the market's next move. It's all in her hands now.