Perception and reality are clashing in light of Wednesday's Federal Reserve meeting, and Jim Cramer has found that the two can pull markets in equally drastic directions.
The " Mad Money " host's view of reality right now is based on what he's talked about with executives so far, who say manufacturing and infrastructure-related orders are surging.
"The basic premise of my worldview right now is that the economy is strong enough to handle not just one, but two or perhaps even three rate hikes this year," Cramer said.
"These executives see strength that's unrelated to anything President Trump has proposed. It has zero to do with Washington, in part because nothing's gone through Congress, so, obviously, nothing's really been done by the new administration other than some deregulation," Cramer said.
Tax cuts will help fuel the economy further, and a half- or three-quarter-point rise in interest rates won't be too painful overall, Cramer said. "That's the reality, and as far as I'm concerned, the reality's pretty OK," he added.
But the market's perception of what frequent rate hikes could do has the power to outweigh the reality, Cramer contended.
When rate hike cycles speed up, the risk arises that rates could tighten too quickly, Cramer said. He nodded to the 2000s, during which the Fed raised rates 17 times, which helped bring about the 2008 financial crisis.
"That's what I'm concerned about here — the perception that rate hikes could do a lot of damage. That's what we need to get through if we want the market to advance further, and by pointing it out I'm simply trying to prepare you for the coming news cycle," which will remind investors of what happened leading up to 2008, Cramer said.
And despite the fact that Cramer's reality is a rational take on the current economic environment, Cramer's experience in money management has taught him that perception can often cloud reality.
Questions for Cramer?
Call Cramer: 1-800-743-CNBC
Questions, comments, suggestions for the "Mad Money" website? email@example.com