CNBC’s Jim Cramer said Friday that he feels the Fed needs to be transparent about its plans, especially in the wake of the restaurant chain. rewardThe highly successful initial public offering, which he believes is a sign of the market overheating.
Cramer believes that a booming IPO market could lead to a flood of money on Wall Street and hiring, which is the last thing the Fed wants when trying to cool the economy.
The Fed needs to stop being so broad and opaque; What we need from them is narrow transparency. “Otherwise, animal spirits will take off again and companies will start over-hiring, which is the last thing the Fed wants.”
He acknowledges that some would argue that the economy is cooling on its own. Giant grocery Kruger I just reported food costs are falling across the board, and Kramer said he’s seeing numbers that indicate lower costs for cars and used clothing.
However, according to Kramer, there is one major problem: housing. Cramer believes the Fed should present a game plan for how it plans to cut the housing market. He said he believes the Fed’s ultimate plan is to increase unemployment so that more young people move in with their parents, as is the case historically when unemployment is rampant.
But he called the plan “complex and, frankly, heartless,” and although the central bank does not control long-term interest rates, he believes there is another way to lower home prices.
“To me, the best thing the Fed could do is figure out, perhaps, a strategy where there is more house building and more apartment building. The only way to do that, though, is to stop scaring the people who work, stop scaring the builders,” He said. “We have a massive shortage of homes in this country, but who is going to build more if they think the Fed wants to crush the entire economy once these homes and condos are ready?”