In September, Sternlicht said that the Fed is using “old data” to attack the economy with unnecessary interest rate hikes. And this month, he argued the economy is “breaking hard” as borrowing costs soar, meaning a recession is now all but inevitable.

But in an interview with Fortune this week, Sternlicht’s gloves came all the way off.

The billionaire investor said that if the Fed continues raising interest rates, as it’s done five times this year, the effects will be so destructive that they will put the entire capitalist system at risk.

“So the rich guy who loses 30%, he’s still rich, right? But the poor guy who’s working in an hourly job that loses that job, he’s going to say: ‘Capitalism is broken, it didn’t work for me. I lost my job. And this whole system has to go out the door,’” Sternlicht told Fortune. 

“You’re going to have social unrest,” he added. “And it’s just because of Jay Powell and his merry band of lunatics.”

Sternlicht isn’t the only one worried about rising interest rates potentially setting off a recession. Economist Steve Hanke told Fortune the Fed was “incompetent,” and said we could be headed for a period of stagflation or recession. And Mohamed El-Erian, the president of Queens’ College at Cambridge, has repeatedly said that the Fed was too slow to respond to inflation last year. Earlier this month, he added that, as a result, the risk of a recession is now “uncomfortably high.” 

For investors, higher interest rates also weigh on stocks, which means the next few years likely won’t be as kind as the bull market of 2020 and 2021.

Sternlicht believes that the Fed is basing its decision to raise interest rates on lagging inflation data, when instead it should be looking at “real-time” statistics and talking to executives on the ground.

The billionaire, who founded Starwood Property Trust, which owns roughly 250,000 residential properties nationwide, says that rents are “slowing” across the board, but the consumer price index (CPI) is still factoring in rent price increases that happened over six months ago, giving the Fed a misleading picture about that state of inflation in the economy.

Sternlicht also points to falling commodity prices as evidence that inflation is beginning to cool. The CRB commodity index, a broad measure of global commodity prices, has dropped 20% from its July record high.

The investor added that he believes the Fed missed its chance to stamp out inflation in 2021, and now it’s trying to make up for past mistakes. But he emphasized that two wrongs don’t make a right.

“They missed their moment during the crazy casino of 2021 when Gamestop was at $350 a share and crypto world was worth $3 trillion,” he said. “It’s too late to fix it now.”

Sternlicht believes the Fed should pause its rate hikes and wait for the effects to work through the economy before it decides what to do next.

When asked why he believes the Fed isn’t looking at more real-time data, and seems laser-focused on raising rates, Sternlicht gave a pointed response.

“I think maybe they’re just not up for the task,” he said. “Maybe they’re not smart enough to understand the impact of their actions. This is kind of like, and I’m not kidding here, the inmates running the asylum. I think they’re just wrong.”