Mad Money

Cramer: Phew! Fed gets it. Prepare for high prices

Cramer: Phew! Fed gets it. Prepare for high prices

Phew! Jim Cramer breathed a sigh of relief when he saw that the Fed actually gets it. The Fed made it clear that it recognized that if there is no inflation, a world of uncertainty and no real risk in keeping rates low—then rates should stay low.

That was exactly why markets initially greeted the decision with a rally and applause before the averages pulled back later in the day when investors rang the register. Cramer expected to see a selloff regardless of what the decision was, partially because the market had run up so much in anticipation of the event.

If the Fed had decided to raise rates, Cramer wouldn't have been surprised if the Dow took a nosedive down 500 points in a heartbeat. The dollar would have soared, emerging markets would have plunged and China would have cratered all because it was "time" for a rate hike.

"We have to ask ourselves, does it make sense to create turmoil because of an amorphous belief that inflation lurks around the corner and there is not ever going to be a good time for tightening, so why not just tighten anyway?" the "Mad Money" host asked.

Federal Reserve Board Chairwoman Janet Yellen answers questions at a news conference following a Federal Open Market Committee meeting Sept. 17, 2015, in Washington, D.C.
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And while the economy is not in the same state of volatility it was when Cramer gave his "they know nothing" rant in the summer of 2007, things are slipping.

Based on the lukewarm housing starts number Cramer saw on Thursday, housing has peaked. Autos, another strength in the U.S. economy, can also only get worse from here.

But there were three critical forces that the Fed addressed directly, which showed Cramer that the Fed understands that things are slipping:

First, there is no inflation. That is a huge positive for stocks, but not for workers. Wages aren't growing, and the only people who seem to be making the money are CEOs. Wage inflation is needed.

Second, Federal Reserve chief Janet Yellen is right to be concerned about international ramifications of even a small rate hike. Europe is trying to rebound, but China and Brazil are struggling and that cannot be ignored.

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Third, the Fed clearly understood there was time to wait. What's the darned risk? In a world with people taking multiple jobs just to survive, why not wait for a better worldwide rebound before taking action?

So what is next?

"I say let's get on with it and find companies we like with share prices that have been kept down by all of this negative chatter," Cramer said. (Tweet This)

Ultimately, Cramer thinks that the U.S. is better off that the Fed stood pat on Thursday. Thus, the wise actions of the Fed will now allow for the higher prices that Cramer expects to occur in reaction.

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