The IPO market may be heating up, and that will put pressure on the Fed, Cramer says

CNBC's Jim Cramer on Friday said he feels the Federal Reserve needs to be transparent with its plans, especially in the wake of restaurant chain Cava's highly successful IPO, which he believes is a sign the market is heating up.

Cramer thinks a prosperous IPO market could lead to an influx of money on Wall Street and a hiring frenzy, the last thing the Fed wants when it's trying to cool off the economy.

"The Fed needs to stop being so broad and opaque; what we need from them is narrow transparency," he said. "Otherwise, the animal spirits will kick in again and companies will start going on a hiring binge, which is the last thing the Fed wants."

He acknowledges that some may argue the economy is cooling on its own. Grocery giant Kroger just reported food costs coming down across the board, and Cramer said he is seeing figures that suggest used car and clothing costs are also declining.

However, according to Cramer, there is one major issue: housing. Cramer believes the Fed must provide a game plan of how it plans to bring the housing market down. He said he thinks the Fed's ultimate plan is to increase unemployment so many young people move in with their parents, as is historically the case when unemployment is rampant.

But he called this plan "convoluted and, frankly, heartless," and even though the central bank does not control long-term interest rates, he thinks there is another way to bring housing prices down.

"To me, the best thing the Fed can do is to figure out, maybe, a strategy where there's more homebuilding and more apartment building. The only way to do that, though, is to stop scaring people who work, stop scaring the builders," he said. "We've got a massive shortage of homes in this country, but who the heck would ever build more if they think the Fed wants to crush the whole economy once those homes and apartments are up?"

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