Read MorePaul Singer: Economy stinks and Obama, ECB to blame
"Central bankers have chosen, and doubled down on, a palliative (super-easy money and QE), which is unprecedented and extreme, and whose ultimate effects are unknowable," Singer wrote of governments stimulating markets, in part through the purchase of bonds.
Singer has long been a critic of mainstream economic policy, particularly taking on high debt to spur financial recovery.
"Asset prices are skyrocketing because of massive public-sector purchases. The tinkering and experimentation that characterizes each round of novel central bank policy leads to more and more complicated unwanted consequences and convolutions," Singer wrote. "Central bankers are, in our view, getting 'pretzeled' by all this flailing, yet they deliver it with aplomb and serene self-confidence. Are they really taming volatility with their bond-buying, or just jamming it into a coiled spring?"
That makes for risk that many don't see, according to Singer.
"Bondholders ... continue to think," he wrote, "that it is perfectly safe to own 30-year German bonds at a yield of 0.6 percent per year, or a 20-year Japanese bond (issued by the most thoroughly long-term-insolvent of the major countries) at a little over 1 percent per year, or an American 30-year bond at scarcely above 2 percent per year."
The opportunity, then, is to short bonds.
"Today, the Bigger Short is in a much larger marketplace," Singer wrote of bonds compared to subprime mortgages, "so it can be undertaken in whatever size one can stomach, and the cost of effectuating it during the waiting period is really low."
"However," Singer added, "the power of the herd on the current upward bond price stampede is beyond anyone's control, so one can lose money waiting for the trade to work out."