Stunned Street sends stocks to all-time highs

Fed keeps bond purchases intact

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

At the open on Wednesday Wall Street was largely filled with anxiety expecting a sell-off; a serious sell-off. Pros were convinced that the Fed was about to taper, that it was a foregone conclusion.

The pros were wrong.

Instead, the Fed defied the market's conventional thinking by keeping its unconventional bond buying program intact. In turn, by the close stocks roared to new all time highs.

"What happened here? How could so many be so wrong? I think I know the answer," Cramer mused.

"The facts changed so Ben Bernanke changed his mind," Cramer said. Here's what Jim Cramer believes was behind the decision to keep the bond buying program going, full throttle:

Fed Chairman Ben Bernanke, speaking at a news conference, is seen on a TV screen on the floor of the New York Stock Exchange.
Getty Images

1. "I think when Bernanke first indicated that it might be time to stop buying bonds he didn't recognize that central banks would come flying in and sell their Treasurys, causing a decline of intense velocity. The market, specifically the central banks, basically caused a tapering for him. He didn't need to do anything."

2. "Bernanke listened to the companies that have talked since that market-based tightening. For example, every single retailer except the dollar stores have had a horrendous time since the interest rate jump," Cramer added. "On Mad Money, only a week ago Manny Chirico, the CEO of PVH, the largest apparel company in the world, said sales had just gotten very soft. Wal-Mart, Target and Macy's all said the same. Bernanke listens."

3. "Bernanke understands that the hard line rhetoric coming out of Washington is going to hurt the economy for certain. Do not underestimate what's about to occur in the next few weeks."

4. "Sure employment's gotten better but Bernanke knows how fickle that can be. It isn't like there are a huge number of jobs to be filled. If anything because we are about to get a new health care plan that could dramatically scale back hiring."

Cramer believes those are all powerful reasons to continue the bond buying program. However, there may be another reason why the Fed isn't tapering – a reason unique to Ben Bernanke.

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"He is acutely aware of events in 1937, when the Fed was worried about its credibility and tightened because we were out of the woods. Back then, the Fed took counsel of all of the laissez faire and hard money advocates and decided not to worry any more about employment. The result was a nation thrown back into a Recession within a Depression."

They say history repeats itself, but in this case, it appears Ben Bernanke is determined to prevent that from happening. "Bernanke doesn't care about being judged by big shot hedge fund managers or bond traders. He's not out to please those who believe its not the government's job to help the underclass," said Cramer. He simply wants to get this economy back on its feet.

Call Cramer: 1-800-743-CNBC

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