The Federal Reserve should start tapering its massive bond-buying immediately, because the program is creating unhealthy asset inflation, real estate mogul and investor Barry Sternlicht told CNBC on Tuesday.
"All my friends who are money managers," he said, "they're much closer to the sell button than they ever were before," especially, since the S&P 500 Index has gained about 24 percent so far this year.
(Read more: S&P up 24 percent in 2013. What's next?)
"If they get nervous, you could see corrections. The volatility will come back instantly," added Sternlicht—chairman and CEO of Starwood Capital Group, which has $29 billion in assets under management.
"If you created a long-term plan for our economy that had some reasonableness ... not fake math, I think the capital markets would zoom," he contended in a "Squawk Box" interview. "I think we'd have a hell of a run here, because there's so much liquidity. There's so much money that wants to be put to work."