Ron Paul: Stock market 'day of reckoning' is near

Despite record highs in the market, former Rep. Ron Paul says the Fed's easy money policies have left stocks and bonds are on the verge of a massive collapse.

"I am utterly amazed at how the Federal Reserve can play havoc with the market," Paul said on CNBC's "Futures Now" referring to Thursday's surge in stocks. The S&P 500 closed less than 1 percent off its all-time high. "I look at it as being very unstable."

In Paul's eyes, "the fallacy of economic planning" has created such a "horrendous bubble" in the bond market that it's only a matter of time before the bottom falls out. And when it does, it will lead to "stock market chaos."

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As far as when the bubble will burst, the former Republican presidential candidate said, "I don't think there's any way to know what the [timeline] is, but after 35 years of a gigantic bull market in bonds, [the Fed] cannot reverse history and they cannot print money forever."

Of course, Paul has been known to make similar calls in the past, but even as stocks continue to make new highs, he remains just as convicted as ever that there "will be a day of reckoning" that will lead to a collapse in both the fixed income and equity markets.

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"I think [the crash] is going to be much greater [than 10 percent] and it will probably go a lot lower than people say it should," said Paul. "I don't think it's going to be just a correction."

Paul added, eventually investors will "lose confidence" in the Fed, and when they do, the market could witness a "very big crash."

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