While Stockman had some pointed criticism of the Obama administration's handling of the crisis on the Ukraine border, he said it's the Fed's easy money policies that has created the framework for a very delicate market.
Read MoreCondemnation of Russia bad and likely to get worse
"The short interest has been killed by the Fed's constant intervention," Stockman said. "As a result you have dangerously fragile markets, so it could easily drop by hundreds of points if things [in Russia] go far enough. But again it's an indication of why we need to have the Fed change course dramatically. We've had 68 months of 0 percent interest rates running. There's nothing like this in history."
And according to Stockman, the Fed's policies have inflated equity valuations while failing to deliver solid economic growth.
"If you look at obviously the small caps in the speculative sectors, we're way over the deep end," said Stockman. "I don't think the real economy is that strong. We'll be lucky to get a 2-percent growth, which is really the natural capacity of the economy that has nothing to do with all this Fed stimulus that is creating bubbles."
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Of course, Stockman has been calling for an economic collapse for years now, and his predictions, like those of Marc Faber and Peter Schiff, have failed to materialize. But that hasn't dented his conviction or his dour outlook.
"We've set ourselves up for a big fall and where this leads to, I'm not sure," he said.
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—By CNBC's Amanda Diaz