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Cramer: Once bitten, has America become twice shy?

(Click for video linked to a searchable transcript of this Mad Money segment)

Jim Cramer thinks a significant shift is underway all across the nation and it threatens to upend a fundamental pillar of investing.

That is, interest rates continue to languish even though the economy appears to be improving. "The yield on the 10-year Treasury has slipped all the way back to 2.5 percent," Cramer noted.

Conventional wisdom suggests that shouldn't be possible.

"In the 35 years I've been trading on Wall Street, this kind of environment (improved jobs reports, etc.) has always been met with rising interest rates," Cramer said.

That's not happening. Demand for safe-haven U.S. Treasurys remains significantly robust. "As a result, the prevailing wisdom is that bonds yields are telegraphing some kind of looming crisis; that yields are so low that a recession has to be around the corner."

"I think that view is wrong," Cramer said.

Jim Cramer on Mad Money.
Adam Jeffery | CNBC
Jim Cramer on Mad Money.

Although there's more than a single catalyst behind the strength in bonds, Cramer believes, more than anything else, the unwavering demand for U.S. bonds is all about our national psyche.

After reading the new book "Stress Test: Reflections on Financial Crises" by former Treasury Secretary Tim Geithner, Cramer has come to believe the national psyche changed, permanently, during the financial crisis.

"I think America's gone frugal," Cramer said.

It's happened before.

"Just like our parents, or grandparents, or even great-grandparents changed their patterns of behavior somewhat radically after the Great Depression, I'm thinking we've changed ours, too," Cramer said.

That is, Cramer said, people grew so fearful of losing their jobs, their homes, and their way of life during the financial crisis that they changed the way in which they view money, particularly debt.

"Borrowing is way down in America. Home buying is way, way down, back to levels that are shocking given the vast size of our country," he said. "People aren't having kids the way they used to, perhaps because they can't afford them."

If you agree that the nation has embraced a new level of frugality, Cramer said, extend the view to the bond market. That is, rather than view demand for Treasurys and the accompanying decline in yield as a sign of impending troubles, Cramer said it should be viewed a sign of new frugalityit's the new normal.

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In the past, an improving economy and rising rates went hand in hand, but not anymore. Cramer said that kind of conventional wisdom has been turned on its ear by the financial crisis.

"Therefore I just can't believe these declining interest rates actually mean that we're going to have an economic collapse," Cramer said. "I'd take advantage of the discounts you're getting in stocks created by those who are leaving the market because they fear another recession. I think it's a false worry that won't make you a dime and will cost you some terrific opportunities. The new frugality is a terrible thing to waste."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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