Ray Dalio: "The Fed's assumptions about how unemployment will lead to inflation are clearly wrong"

Ray Dalio said the Fed won't get is balance sheet to $2.4 trillion

Bridgewater founder Ray Dalio: We have two economies now from CNBC.

Ray Dalio was on CNBC yesterday and spoke about the Fed. He said there is no compelling reason to tighten monetary policy.

"The Fed's assumptions about how unemployment will lead to inflation are clearly wrong," he said.

"This is very-much like 1937," he said. That's when there was a tightening at a time when the wealth gap was similar to today.

He said that expectations for trimming the $4.2 trillion balance sheet to $2.4 billion by 2022 are overblown.

He believes it will be like with interest rate hikes on the dot plot -- the direction was correct but the pace much slower.

"But I don't think it's a big deal," he said and then talked about how there are two economies in the US with those on top and those in the bottom-60%. He warned there is the potential for real discord.

Aside from that, he said "we're in a good part of the cycle."

Dalio's book was released yesterday and I got a copy and read a few chapters. It's generally about his life and interpersonal relationships but there are some nuggets on markets. He plans to write a second book on markets and the economy.