The stock market is "set up for a major crash," thanks to the Federal Reserve's massive easing program, says hedge fund manager Mark Spitznagel, founder of Universal Investments.

Equities could plummet 40 percent, he tells CNBC. That would put the Standard & Poor's 500 Index at 1,051 compared with Thursday morning's reading of 1,751.

Our economic structure is the problem, Spitznagel says. "It's a period we've been in a number of other times," he said.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

"I would argue all the major tops we've seen in the market over the last 100 years look very much like it does today. This is very much a Fed-induced distortion."

The central bank has pushed short-term interest rates down to almost zero and is keeping long-term rates low with its quantitative easing. The central bank is buying $85 billion of Treasurys and mortgage-backed securities per month.

"Assets have been bid up to an unsustainable level based entirely on an artificial economic illusion that is a zero interest rate environment," Spitznagel explains.

"The hardest thing to do right now, what makes you look like a fool, is to sit and earn zero. I would argue it's the best investment to sit earning zero," he advises.

The stock rout could happen in the next year, he says.

"If history is any guide, we should expect it sooner than later. . . . But history need not be a good guide because we're in this monetary experiment, the likes of which we've never seen."

But not all experts are bearish on stocks.

"The bottom line is that, as long as a low-growth environment also features low inflation and an accommodative monetary policy, the price-earnings multiples of successful companies can rise a lot higher than most people think," Jon Markman, founder of Markman Capital Insight, an investment research and advisory firm, writes on Yahoo.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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