Fed doesn't need to 'destroy the economy' to beat inflation

CNBC’s Jim Cramer stated Wednesday he believes inflationary pressures in the U.S. could be relieved with out the Federal Reserve mountaineering rates of interest, an motion he thinks can be damaging for the economic system.

“Be patient. Don’t panic. We’re getting there. The seeds of deflation are being planted as we speak … and the blossoms will soon be self-evident to all but those who want to bet against you, the Fed and capitalism,” the “Mad Money” host stated, after the Labor Department reported earlier in the day that consumer prices in September rose slightly more than expected.

Cramer stated he was notably serious about the bond market’s response to the newest inflation studying, as each the benchmark 10-year Treasury and 30-year Treasury rallied “even as inflation’s supposed to be steamrolling the entire world.”

“If it’s true that the Fed’s really on the verge of tightening, the bond market sure has a funny way of showing it,” Cramer stated. “Maybe, just maybe, some people are thinking that inflation could soon peak, meaning this might be one of the last red-hot CPI numbers.”

Cramer stated in his opinion, he sees indicators suggesting there can be enhancements in the components of the economic system which might be experiencing inflationary pressures.

For instance, Cramer pointed to technical analysis that argues the huge run in oil costs could roll over. He stated one other commodity he watches carefully, linerboard, may see reduction as provide ramps up, serving to ease packaging prices.

“It’s not just containerboard,” the former hedge fund supervisor stated. “If you look at what the analysts are forecasting for the chemical companies — and remember these are the companies that make the building blocks of American industry — they’re almost all expecting a down 2022, again, … because of overcapacity.”  

Moreover, the Biden administration is taking steps to try alleviating port congestion, and Cramer stated used automotive costs — a key inflation driver to this point this 12 months — had been “mildly lower” in September. Home gross sales are also cooling, he stated.

“[If] what I’m talking about occurs, then you’ve got to forget this whole transient inflation and get used to this new term. … It’s called peak inflation,” Cramer stated. “Turns out, we don’t need the Federal Reserve to destroy the economy in order to save it from inflation. With enough time, capitalism is going to solve the problems on its own.”

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