Jim Cramer: The 'seeds of deflation' are being planted in the U.S.

"Be patient. Don't panic. We're getting there. The seeds of deflation are being planted as we speak," CNBC's Jim Cramer said on Wednesday's episode of "Mad Money." Subscribe to CNBC PRO for access to investor and analyst insights: https://cnb.cx/2Vtntx6

CNBC’s Jim Cramer said Wednesday he believes inflationary pressures in the U.S. can be relieved without the Federal Reserve hiking interest rates, an action he thinks would be damaging for the economy.

“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 said, after the Labor Department reported earlier in the day that consumer prices in September rose slightly more than expected.

Cramer said he was particularly interested in the bond market’s reaction to the latest inflation reading, as both 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 said. “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 said in his opinion, he sees signs suggesting there will be improvements in the parts of the economy that are experiencing inflationary pressures.

For example, Cramer pointed to technical analysis that argues the big run in oil prices may roll over. He said another commodity he watches closely, linerboard, may also see relief as supply ramps up, helping ease packaging costs.

“It’s not just containerboard,” the former hedge fund manager said. “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 said used car prices — a key inflation driver so far this year — were “mildly lower” in September. Home sales also are cooling, he said.

″[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 said. “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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