That could unleash significantly faster growth than the 2 percent expected this year under a best-case scenario. "If we have good fiscal policy, America could start growing at 4 percent and create 400,000 jobs a month," Dimon said.
That would also mean a rise in interest rates in 2014, with the federal funds rate reaching 3 percent and rates on the 10-year Treasury note at about 5 or 6 percent.
But under a worst case scenario, U.S. policies do not deal with growth and there's inflation anyway. Dimon said that with stagflation, rates could spike as high as 7 to 9 percent.
"What we need is good fiscal policy and we can avoid the really bad outcomes," Dimon said. "The Fed needs help from Congress."
(Read More: Jamie Dimon: Economy Could Boom With Grand Bargain)
He said the U.S. is in pretty good shape, and on fiscal issues, the way forward is clear, but the will isn't there.
(Read More: JPMorgan CEO Hits Back at Policymakers in Davos)
Dimon also said that instead of worrying about whether banks are too big to fail, there should be bankruptcy and orderly liquidation for banks of all sizes.
He said if a bank fails, the board and management should be fired and taxpayer should never pay.
With a bankruptcy, "The only people who are going to lose money are equity holders and unsecured debt holders," Dimon said.