Watch: Sam Zell: Flooding markets with capital brings “consequences”

Billionaire real estate investor warns of recession

For every action, there is an equal and opposite reaction. And for Sam Zell, the move to “flood the world with money” has set us up for a liquidity crisis.

Speaking on CNBC Wednesday, the billionaire real estate mogul and chairman of Equity Group Investments said that dating back to World War II, there’s never been a recession without a liquidity crisis, and predicted that there would be one upcoming. Zell said the Federal Reserve, which has moved to bump interest rates, was taking the necessary actions, and predicted that interest rates would rise again.

“The Fed is doing all the right things now,” he said, “reflective of the fact that the Fed didn’t do all the right things earlier this year.”

Zell told the network that he sees no reason to be “overly optimistic or that this will be done very quickly or without pain.”

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“10 percent inflation is a serious scenario,” he said. “I’m not even sure if that’s really reflective of how much inflation is really existing.”

Asked about his own portfolio, Zell said that he had been “hoarding cash for some time.” He then pointed to the challenges of getting new debt, even for blue-chip companies.

“We just finished redoing our revolver,” he said. “We’re an A- [credit rating] company, and a $40 billion company, and very low leverage, and [still] getting that revolver done was a challenge.”