Cramer says he 'just got the buy signal from the president.' Here's why and when to buy

Published Fri, Sep 17 202112:01 PM EDTUpdated Fri, Sep 17 202112:58 PM EDT

CNBC's Jim Cramer said Friday the seemingly annual fight in Washington over raising the debt ceiling to keep the federal government out of a first-ever default has historically been a green light to get ready to buy stocks. Cramer, on "Squawk on the Street," was reacting to a Reuters headline about the White House warning that not increasing the U.S. government's ability to pay interest on prior spending could cause a recession. "I did a study of this, and you had to buy every time some high official said this would cause a recession," Cramer said. "I just got the buy signal from the president" on any market fallout over the "game of chicken" that plays before the debt ceiling eventually gets increased, the "Mad Money" host added. It's not "Rebel Without a Cause," said Cramer, referring to the classic 1955 movie starring James Dean in which one of the teen drivers drove off a cliff on a dare. Using the movie metaphor, he was suggesting that going off a borrowing cliff and having the U.S. government default on its debt payments is not palpable to Democrats, who generally favor increasing the ceiling, or to Republicans, who usually argue against it and run it up to the last second before agreeing to raise it. Treasury Secretary Janet Yellen warned House Speaker Nancy Pelosi , D-Calif., last week that the mere specter of a U.S. default can have drastic consequences. Yellen, a former Federal Reserve chair, reiterated that lawmakers have until some point in October before Treasury will exhaust its extended efforts to prevent what would be a historic default. Senate Republican leader Mitch McConnell , R-Ky., has said Democrats, who narrowly control the House and Senate, should raise the debit limit on their own . Increasing the debt ceiling does not authorize additional federal government spending. Instead, it allows the Treasury Department to continue to pay for debt accrued due to money that's already been spent by the government. It's similar to how consumers pay off credit card bills from the prior month. — CNBC's Tom Franck contribute to this report.

Jim Cramer on CNBC's Halftime Report.

Scott Mlyn | CNBC