Schiff: Fed's 'heroin' is about to wear off

While traders obsess over the timing of the Fed's next rate hike, Peter Schiff has a simple message for Wall Street: don't.

On CNBC's "Trading Nation," the outspoken investor said the central bank is "bluffing" and instead of waiting for a rate increase, traders should have their sights set on another round of quantitative easing.

"We are addicted to zero percent rates," he said. Schiff says that raising rates would "pop" the stock and real estate bubble that the Federal Reserve has created through its low-rate policies. And that would send the U.S. economy into a catastrophic recession. By his reasoning, the Fed will do anything to prevent stocks from falling. In fact, he sees more stimulus ahead.

Read MoreFed: June rate hike unlikely

"I think they're going to do another round of quantitative easing," added Schiff, CEO of Euro Pacific Capital. But according to Schiff, even another round of easy monetary policy won't be able to stop what he calls an impending crisis.

"When the dollar finally does collapse based on our failure to raise rates and our launching QE4, it's going to be that kind of inflation and currency crisis that will ultimately force the Fed's hand," he said. "That's when we're going to be in some real trouble."

And according to Schiff, there's no telling how bad it could get. "We've had a huge dose of this monetary heroin and it takes a while for that high to wear off," he said. "We've just postponed the pain."

Of course, Schiff has made similar predictions in the past. And although he has correctly forecast the lack of Fed rate hikes, some of his other predictions—including gold going to $5,000—have yet to pan out.

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