CNBC's Jim Cramer said Monday that the persistent sell-off in the stock market has gone beyond concerns about a slowdown in global economic growth and what the Federal Reserve will do on interest rates this week and next year.
"This was a soul-searching weekend for many of us because you left on Friday kind of in disbelief that the market could just fold. And it's not just worldwide slowing growth. It's not just fear of the Fed. But it's basically exhaustion," Cramer said on "Squawk on the Street."
The Dow Jones Industrial Average, S&P 500 and Nasdaq started the new week by falling sharply in early trading after they all tanked about 2 percent Friday. Ahead of Monday's trading, the Dow, S&P 500 and Nasdaq were off more than 5.5 percent each for the month, marking the worst December start in trading since 1980. All three stock indexes are in correction territory.
"I think that there's a lot of people who say, 'I got to get out. I got to get out, because everyone else is getting out,'" said Cramer. "It's not a safe market. It's a treacherous market. This is the most treacherous market I've seen in a many a year.'
The Fed, which meets Tuesday and Wednesday, is in a tough spot, Cramer said, reiterating that if central bankers don't raise rates they risk really scaring the market about the economy. Fed Chairman Jerome Powell should increase rates this week and then pause, the "Mad Money" host said.
Powell is too focused on the strong labor market and the "old paradigm" that full employment could cause troublesome inflation, said Cramer, who has been critical of the Fed chief in recent months for allegedly not recognizing that shifts in the economy should warrant a scaled-back rate strategy. Cramer said the job market is a lagging indicator.
It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory
A rate increase this week would be the fourth in 2018. After its latest hike in September, central bankers projected three moves next year. The Fed will deliver an updated rate path Wednesday. The market expects the path to be scaled back.