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Cramer: A 1937 Stock Market History Lesson

Cramer: Support the 'Only Grownup' in DC!

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They say history repeats itself; fortunately Ben Bernnake knows it. And Jim Cramer thinks the nation is indeed fortunate to have a student of history as the Fed Chairman.

Cramer believes that Bernanke's keen understanding of events that happened in the years following the Great Depression are likely playing a critical role in current policy – in fact, he thinks it's preventing the nation from spiraling into a terrible downturn -- right now.

"Thank heavens Ben Bernanke doesn't listen to those who have no idea about history, including most economists," said Cramer. "He recognizes that we could be in a 1937 situation."

And in 1937 the situation wasn't good.

At the time President Roosevelt, Congress and the Fed all made moves that sent the economy into tailspin. That is, they raised existing taxes, implemented new taxes and tightened money supply. Although the economy looked as if it has recovered, it was far too fragile to withstand those kinds of developments.

The result was a recession in 1938.

Cramer thinks the situation in Washington today seems eerily similar to that of the late 30's. Again, lawmakers are convinced the economy is stable and they're making moves that could be disastrous; that is, they've cut spending and raised taxes via sequestration at a time when the economy remains extremely fragile.

The latest jobs report seems to confirm just how frail the economy really is. It showed the economy added only 88,000 jobs while 500,000 Americans left the labor force, (i.e they stopped working or looking for work and were no longer counted in the official employment numbers.

That's not a development that reflects prosperity.

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Fortunately, Cramer thinks Bernanke realizes it, and has therefore remained extremely aggressive in his attempts to stimulate the economy.

"We owe Ben Bernanke a huge debt of gratitude. He saw this coming. He knew that we weren't out of the woods. He is doing everything he can to try to change the course of human events and he is the only person in Washington trying to do so," said Cramer.

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Cramer concedes that by keeping rates at historic lows and sticking with his target of 6.5% unemployment, Bernanke risks terrible inflation and sending interest rates sky high – but Cramer thinks it's by far the lesser of two evils.

"Typically, he is derided for being too aggressive," said Cramer. "Personally, I think he is the only grown up in Washington."

Call Cramer: 1-800-743-CNBC

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