Jim Cramer: To understand this year's vile market, study the dot-com crash of 2000

Published Mon, Jul 4 20226:49 PM EDTUpdated Mon, Jul 4 20227:09 PM EDT

Forty years is an awfully long time. Yet that's how much time has passed since we have had an abomination like this first half of the year. Almost everything went down. Your stocks went down. Your bonds went down. Your house went down. Your crypto went down. The only thing that didn't go down were the prices you paid for things, especially oil. This disaster didn't happen in an instant. While even the Federal Reserve admitted it was slow in starting the now legendary tightening, the pivot to even talking tough in November mattered greatly. It's amusing that so many critics talked about how Fed Chair Jay Powell was so late — too late even. To which I say, really? Has he really been a failure? Things have fallen so far so fast that if he keep tightening another 100 basis points — something I want — he might be done with this battle. And I only want another 100 because I have seen too many series where it looks like the villain is dead, but it was a premature declaration. The wipeout has been pretty substantial and all-encompassing. The latest, the decline in your home's value, is important because the Fed has had it with home price appreciation. We thought that because of a home shortage this decline couldn't happen. But home price affordability is an ineluctable concept. You take rates up enough and you make homes too expensive to buy. We got fooled on this one because we spent too much time thinking about new home sales. It was existing home sales that mattered. They are tailing off fast because, as Zillow will show you — don't look if you can avoid it — your home has gone down in value. And just like you don't like to sell a stock when it is down, you don't want to sell a home when it is down. I suspect that the Fed won't stop until homes have given back all of the 20% gain for the year that ended in March, as it is the most egregious of the costs it can control. Bonds were totally a product of a big rate hikes which caused the curve to go up a lot, but not as much on the long end as you would expect if the Fed were selling bonds as aggressively as we thought. This bond rout most likely continues because rates have to go up more to cool housing but to also stop the formation of business and make people with capital less certain of expanding to hire people. Remember there are two ways to tamp wage demand. You have a bigger pool of labor, which comes from an easier immigration policy. Or you crush job growth. We are going for the latter because the former is not possible in this country. I don&#