Silicon Valley venture capitalist Peter Thiel told CNBC on Monday that we are in a "government bubble of massive size," and that the bond market is the most distorted of all the markets.
In a wide-ranging interview on CNBC's "Squawk on the Street," Thiel also spoke about tech investing, the PayPal-eBay split, Alibaba, cybersecurity and Elon Musk.
"I think the thing that is most distorted is the bond market and fixed income, and perhaps less on the equity side, but we certainly are back on a government bubble of massive size," he said.
Tech stocks are quite a different story, he added.
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"They're somewhat overvalued but that's not the core of the insanity," he said. "Tech investors always overrate growth and always underrate durability. You can measure growth but you can't measure durability."
He said he thinks Airbnb is undervalued.
"If I had to bet on one that would be the next hundred-billion- dollar company it would be Airbnb and the consumer space," Thiel said. "It's a giant market and it keeps growing very fast. Investors are very biased towards things that they understand."
He said that since investors tend to drive around in black cars and stay in five-star hotels, they are more comfortable with Uber than with a couch or house-sharing service.
For that reason, he said, "Uber is overvalued, Airbnb is undervalued."
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On the recently announced plan to split PayPal from eBay, Thiel said the companies have gone separate ways. "It makes sense for them to naturally spin it out again and for PayPal to focus 100 percent on payments," he said.
He added that PayPal should not pursue mergers in the foreseeable future.
"I think mergers only make sense when there are real synergies ... and it's not obvious what the synergy between PayPal and any other business would be at this point," he said.
He expressed doubts regarding bitcoin's role as a payment system.
"I think it's worked on the level of a currency, where it's a speculation on the level of a currency, but it's not yet worked on the level of a payments system, and you need to get the payments system to work, not just for illegal payments but for legal payments."
On Alibaba, he said investing in the giant Chinese online retailer is just a bet on Chinese politics, specifically how long founder and CEO Jack Ma will stay in the "good graces" of the Communist government.
Thiel also said cybersecurity is going to be an ongoing problem. "So much commerce is happening on the Internet and we often have no good intuition of how poor the security is," he said, but added that defense companies cannot provide a solution.
"They're not software companies." he said. "I think it's mostly a software challenge, it's not something you'd want a quasi-government contractor to do."
He had praise for Musk, the founder of Tesla and Space-X, saying "I would not even want to try to compete with Elon. He's in a class of his own."
In a CNBC interview last month, Thiel said he saw more upside for Google stock over the next decade over Apple.
The risk with Apple would be that the company, at some point, might lose the pricing power on smartphones, Thiel said, adding the tech giant's newly announced mobile payments system and the Apple Watch were not enough to make a difference to the company's bottom line.
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In that interview, he also criticized Twitter, saying it's a "horribly mismanaged company."
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On Monday, he elaborated on those comments. "If you have an idea that is really good, you can often be a little sloppy on some other things," he said.