Ron Paul is warning negative interest rates will crush the global economy.
The former Republican congressman from Texas believes the U.S. won't be the exception.
"We will join the rest of them and go to total negative rates in hopes that that will be the solution," he told CNBC's "Futures Now" on Thursday. "We've never had as many currencies in negative interest rates. $17 trillion worth of bonds [are] in negative interest rates. It's never existed before. And, that's a bubble. So, we're in the biggest bond bubble in history, and it's going to burst."
Paul, a former presidential candidate and vocal libertarian known for his economic and stock market bubble warnings, contends the Federal Reserve's policies are powerless in this environment. He doesn't believe this week's Fed meeting will provide any kind of relief and cutting rates will not be the answer.
"You can't predict exactly where the creation of credit goes," said Paul. "We have a ton of inflation with all that QE [quantitative easing]. And, every time you lower interest rates below market levels and create new credit, that's a bubble."
Paul has been waving the red flag for years, warning that a once in a lifetime market drop of 50% or more will strike stocks. With bonds yielding negative rates now in focus, he suggests the danger is ballooning to unseen levels.
Yet, he's unsure of the timing of a collapse.
"You don't know this precise time. But you know it can happen," he said. "How do you sell a bond that pays a negative rate? Who's going to jump up and down?"
But what a difference a year makes.
"It can be pretty well validated by looking at monetary history that when you inflate the currency, distort interest rates and live beyond your means and spend too much, there has to be an adjustment," Paul told "Futures Now" last October. "We have the biggest bubble in the history of mankind."
On Friday, the 10-year yield closed at 1.9%, its highest level since August 2.
So, why is Paul still warning an epic bond bubble will burst an create chaos if rates are no longer above 3%?
According to Paul, central banks which drastically lower interest rates destroy the pricing mechanism in financial markets.
"I don't think anything even existed coming close to what we're facing today," Paul said.