Futures Now

Ron Paul: Watch out. Dollar's in a 'huge bubble'

This is the next financial crisis: Ron Paul
This is the next financial crisis: Ron Paul

Despite rising stock prices and a falling unemployment rate, the United States is on the brink of a catastrophic "financial crisis," according to former U.S. presidential candidate Ron Paul. And the culprit could be the .

"There's a huge bubble with the dollar," Paul said on Tuesday's "Futures Now." The Dollar index, which measures the dollar against a basket of other major currencies, is near 12-year highs as the Fed has retreated from its stimulative programs at just the same time that other central banks have introduced their easing measures. But rather than take the rally as a sign that investors see strength in the U.S. economy, the outspoken former congressman sees the dollar's massive move higher as simply a byproduct of a world awash in easy money.

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"It's not so much that the dollar is a great currency. It's the fact that nothing else is any better, said Paul. "The fundamentals are a disaster. The economy is in bad shape when you have more than half the people hardly making ends meet."

Ron Paul
Adam Jeffery | CNBC

Paul declined to offer a catalyst or even a timeframe for when the dollar "bubble" could pop, but did warn that it does happen, it will be quick and unexpected. "Most of the time, these things are unforeseen," he said. "Did anybody warn us about 2007, 2008 in Lehman Brothers? Nobody warned us about that."

According to Paul, the collapse of the dollar, and by extension, the stock market will likely come when the Fed begins to raise interest rates, something many expect it will do later this year. In his view, the Fed's policies, and not real economic growth, have been the real reasons the dollar and U.S. equities have rallied. And the absence of those policies could lead to disaster.

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"Right now, the markets have tried to correct things since '08 and '09 but the correction has been prohibited," Paul said. "It's just like in the Depression; we prohibited, we delayed the inevitable."

Of course, Paul has made similar bearish warnings in the past couple years, none which have really come to fruition. But his latest cries of caution come at a curious time. His son, the Kentucky senator, Rand Paul, recently announced his candidacy for the 2016 presidential election. But has he warned his son about this brewing "crisis?"

"I haven't talked to him about that in recent months," Paul said.