Stockman argues that the rapidly deteriorating economic environment is going to send stocks and oil prices falling even lower.
“I think your traders are smoking something stronger than what I can legally buy here in Colorado,” Stockman said.
Oil prices are heading “into the teens”, Stockman explained, “because the world economy is falling apart.”
Stockman paints a picture of a gloomy road ahead as he highlighted clear economic warning signs that he says will put the global economy “in the jaws of a recession.”
“We’re done with a 20-year credit bubble and Central Banks everywhere are lost, out of dry powder,” Stockman said.
“Everywhere trade is drying up, shipping rates are at an all-time low, Singapore is essentially crashing, and that means there is a recession that is going to engulf the entire world economy including the United States.”
Stockman went on to explain why he believes the Fed is out of options, how they are ‘wrecking’ the U.S. economy, and that they should resign.
“This time we’re looking into the jaws of a recession. It will become more and more evident by the week and month, and the boys and girls in the market are going to panic when they face recession and the Fed can’t do anything because its at the zero bound already and its balance sheet is already hideously bloated.”
When asked if conditions would improve if the Fed implemented negative interest rates or more quantitative easing, Stockman said:
“No, I think if they try to seriously go to negative interest rates there will be a political lynching party… we have already punished savers and retirees like never before. This whole policy of ZIRP, 84 months, is really an outrage.”
And if the Fed did cut rates to negative?
“They are asking — finally — for the people of this country to wake up, get out their pitchforks, get out their torches, and come after these people who are totally out of control and are wrecking our financial system.”
So what should the Fed do?
“If someone asked me, what should the Fed do? What they should do is have the good graces to resign, because they are lost, none of this has helped the economy.”
So where is the economy and the market headed?
“We are headed back into recession and we are going to have a huge crash in the financial markets… we’re gonna be at 1,300.”
Click below to watch the interview on CNBC: