Oh yeah. That's right. They are just pieces of paper. Not cash. Not Treasurys. Just pieces of paper and they can go down and down and down and some can even go to minus $37.

I think Monday's oil crash, the one that took it to well below zero, reverberated today in one of those periodic bouts the market gives you, the ones that say look out, this stuff could be worthless, so just sell everything. That's right, if you have to pay $37 to get rid of a barrel of oil, how much would you have to pay to get rid of shares of a bank that lent to an oil company? How could you have an economy with so little demand that you might as well take delivery of the oil and burn it somewhere when no one on the planet is looking.

Yep, I think the collapse has much to do with the real world interfering with the stock world and making us realize that we may have rallied hard from the bottom for absolutely no reason.

In March, the stock market had crashed from 28,000 to 18,000 and then we flew back to 24,000 for no particular reason whatsoever.

Not only are things not better in terms of the coronavirus outbreak when we were at the bottom, but they certainly aren't better when it comes to business. They can't be, or someone, some business, some rich airline or cruise company, or hedge fund magnate, would have stepped in and bought all the oil that was for sale because even if it is paper, it represent a little less than day's supply, 10 million barrels.

So we have to extrapolate, correct? We have to figure the economy is incredibly weak. And when we heard this morning from two fine companies, IBM (IBM) and Coca-Cola (KO) , that things have gotten weak at the beginning of the end of their quarters -- well isn't that proof about how bad things are?

And on top of all that, we got some darned fool governor with a state filled with hot spots who wants to start opening bowling alleys and hair salons and massage parlors, massage parlors for heaven's sake, to show that it's time to unleash the inner-tough Georgian, just when things are barely settling down and we still can't get swabs or tests or contact tracing, let alone an antiviral or a vaccine.

OK, at the risk of getting everyone to hate me or at least think I just fell off of a turnip truck, let me take issue with these precepts, because we may be missing some bigger picture.

First, oil is totally disconnected from any kind of market we know. Oil, that was due to settle in April, collapsed because the market of it broke. Some rookies who didn't know what they were doing, didn't understand that all the traditional storage areas are filled got fleeced because of a lack of knowledge. It is hard to believe. We have been saying that there's too much supply being pumped, but the producers weren't listening and the buyers were just plain ignorant.

The fact is, oil's been way too high, hence why the futures collapsed again for the next months. Think about it. The traditional users of crude have all been set back by Covid-19. Our oil expert, Rusty Braziel, the man who called for oil Armageddon, told us Monday that 85% of the decline is because of the disease.

In any other business, literally any business, if you saw demand lowered, you would make less. Right now toilet paper is in short supply. But if there were a glut of it, do you think that Kimberly Clark (KMB) and Procter & Gamble (PG) would keep manufacturing it as the same pace they are now? Do you think the manufacturers of Purell are going to flood the world with Purell after Walmart (WMT) says "we have enough, no thanks?"

Of course not. Levi Strauss (LEVI) wouldn't keep sewing jeans if they weren't needed. Nucor (NUE) would produce less steel if there weren't a need for it. Scotts Miracle-Gro (SMG) wouldn't make as much garden products if Home Depot (HD) said it didn't need them. And Micron (MU) would shut down production lines rather than take pricing right through the cost of production.

But not U.S. oil producers. As oil started collapsing earlier this year, did they pull the plug? Did they cut back? Did they look at the Covid-19 situation and recognize that airline travel and car driving would decline radically?

No.

Once they saw what everyone else saw, did they take radical action?

Nope.

Did they agree to produce less, so as not to overwhelm the commodity markets and cause dislocations like we saw on Monday?

Not a chance.

They just kept pumping and pumping and pumping pretty much the same record amounts that they were pumping last year, about 13 million barrels a day.

That's ridiculous. If your product is in glut you stop producing it especially when it costs something to store it. You can't leave it in some big hole in the ground. And you can't ship it where it isn't needed.

Oil people don't know how to turn the spigot off. It has to be turned off for them. In bankruptcy.

Oil people don't know how to turn the spigot off. It has to be turned off for them. In bankruptcy. The fact that oil out three years is trading at $40 a barrel shows you the short-term nature of the situation. Everything's complicated by this ridiculous USO (USO) , which is a stock that takes investor money and uses it to buy oil futures contracts. This silly thing owns 23% of the entire June oil contract that crashed. Every time oil drops, the USO has to rebalance and sell so it becomes very self-fulfilling. It could be a total washout, hence why 700 million shares traded as low as $2 with short sellers pushing it down, knowing that the darned thing is worthless if near term oil keeps going down. It's just a flawed instrument caught in the crossfire of overproduction that can't be stopped until the producers are shut-in.

We have seen this happen once before -- during the Great Depression when FDR created the Agricultural Adjustment Act, which authorized the destruction of crops and livestock to get the price higher. I mentioned now that the oil prices could get boosted if the president were to pay the oil companies not to produce, which is what they want. I took a lot of heat on Twitter, but I was just thinking of the Agricultural Adjustment Act. It kind of worked and kept farmers farming and ranchers ranching. Are times this bad? You bet they are if you are in oil. But the bosses are a lot more wealthier than the farmers were back then, so don't bank on it.

It's complicated and it is scary, but the higher price of the out years shows you that there are plenty of people who know that there will be demand when we beat Covid-19 or tame it or whatever.

And how about the rest of the market? I think that oil is coloring everything. When IBM says that the end of March was weaker for software, when Coca-Cola predicts a big decline in soft drink sales because of the lack of demand from outside the house, you can extrapolate and figure here we go, soda and computers are going to join oil in an incredible descent. When we hear that Apple (AAPL) is pushing out iPhone sales, well there goes that ballgame.

Here comes Georgia Gov. Brian Kemp, as the Washington Post says, on an "aggressive course to reopen...."

And, of course, the rap is things are only going to get worse because here comes Georgia Gov. Brian Kemp, as the Washington Post says, on an "aggressive course to reopen putting his state at center of deepening national debate."

Now, I know it is probably too soon to open some of these small businesses. But I also know we are on a collision course with 35 million unemployed, which can quickly become an angry army not unlike what we saw in Europe after World War I. Gov. Kemp may not be thinking historically, but the fact is he's sick of waiting for all of the tests and the antibodies, and he's making a bet that if things get out of hand he has enough medical supplies to shut things down again and try to save as many lives as possible. Reckless? Crazy? How about anxious to quell pending social arrest? How about just a desperate, gutsy and perhaps wrongheaded, perhaps not, gambit to save the middle class before its destruction?

Too dramatic? I don't know, if we are talking about burning oil to save producers, if we are talking about the collapse of every company and driver that needs fossil fuels, who knows? Maybe Kemp's on to something. And if he's not? Let's hope he's got the equipment needed to bring the horses back into the barn and save them along the way.

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