The markets are whistling past a graveyard: Peter Schiff

To say that 2016 — all two weeks of it — has been tough would be a vast understatement.

Global markets have seen more than $3 trillion in losses this year as a heap of selling has pushed stocks around the world either into correction or an outright bear market, according to data pulled by Howard Silverblatt of S&P Dow Jones Indices. However, as many on Wall Street point the finger at the collapse in oil prices and continued turmoil in the Chinese stock market, one market pundit says there's no one to blame but the Federal Reserve.

"I think the reason the market is going down is because the Fed pricked the bubble. The Fed raised rates," Peter Schiff, the head of Euro Pacific Capital told CNBC's "Futures Now" in a recent interview. Schiff is a fierce critic of the central bank, which he believes has done more harm than good with its accomodative monetary policy.

"We are trying to rationalize it by pretending what's happening in the U.S. stock market has to do with factors beyond our control…so people can continue to pretend that everything is fine, that we have a legitimate recovery, the Fed can continue to raise interest rates and everything is going to be great," he added.

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The S&P 500 is down more than 9 percent from since Fed Chair Janet Yellen announced she would raise interest rates for the first time in nearly a decade last month. A move in which Schiff, a longtime Fed critic, believes she will quickly have to reverse.

'Whistling past the graveyard'

Last week, weak retail sales data converged with fears about the health of the global economy, pushing stocks lower and sparking a new round of speculation that the Fed might have to curtail its interest rate tightening campaign. A few market observers speculated that a new recession might be just around the corner, if it's not already here.

"The great recession of 2008 is going to resume in earnest because the problems are bigger than ever, and I think the market is going to continue to be under pressure until the Fed rescues it," he said. "The markets are going to drop until the Fed changes the game," added Schiff.

He is sticking to his guns that the Fed will take back the rate hike and ultimately launch another round of quantitative easing.

Read MoreA recession worse than 2008 is coming

For Schiff, the weakness in the Dow Transports, which is down nearly 30 percent from its November 2014 high, shows that the U.S. could already be in a recession. "This is one of the most economically sensitive averages, and they should be benefiting from low oil prices but instead the index is collapsing," he explained. "People are whistling past a graveyard."

Despite the sell-off, Fed officials maintain that interest rates will continue to rise at a gradual pace. New York Fed President William Dudley said Friday that in terms of the economy, "the situation does not appear to have changed since the last FOMC meeting."

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