Despite the record highs we see in US stocks at the moment, Ron Paul stated that the expansive monetary policy of the Fed pushed stocks and bonds to the edge of a disaster; one that could happen any day now. He is very surprised that the US Federal Reserve has no problems endangering the market.

He spoke after a policy meeting of the Fed last week when the S&P 500 (SPY) was only 1 percent away from its all-time high. Paul does not feel very comfortable and finds the situation unstable. In his eyes, the economic plans of the Federal Reserve caused a hideous bubble in the bond market.

Chaos and correction

It is only a matter of time, he feels, before the market collapses. When that happens, chaos will rule the stock market. With regards to timing of the bubble bursting the former Republican presidential candidate feels that it his hard to predict, although the Fed cannot go back in time and undo the damage.

Paul is known for similar predictions. Now that stocks are reaching record highs once again, Paul remains convinced that there will be a day of reckoning, which will bring the collapse of both the fixed income and the stock market.

More than a correction

He believes the correction will amount to more than 10 percent and the markets will drop a lot further than people think they will. Paul thinks it will be more than just a correction and he added that investors will ultimately lose faith in the Federal Reserve and when that happens, the market will experience a big crash.