David Stockman, White House budget director under President Reagan, has warned about the dangers of a financial crisis for some time, and he's not backing down now.
"Each and every day the central banks in the world get more out of control fueling a bubble the likes of which we have never seen in modern times, if ever," he told Fox Business Network.
Stockman was referring to central bank easing programs. The Federal Reserve apparently plans to keep interest rates near zero until at least the middle of next year.
Meanwhile, the Bank of Japan recently announced a major increase in its monetary stimulus, and European Central Bank President Mario Draghi has said in recent weeks that the ECB will expand its accommodation, too.
So what should investors do?
"Get out of harm's way," Stockman said. "You sell your stocks and bonds and get into cash and put your head down. The dollar is the one thing in the world that will go up as we get into this currency war and this race to the bottom."
The greenback indeed hit a seven-year high against the yen and a two-year peak against the euro last week, but analysts say that puts the dollar at risk.
"U.S. dollar speculative positioning is increasingly becoming a very crowded trade, which leaves it more vulnerable to pullbacks in the near term on the back of disappointing economic data from the U.S., which acts to dampen Fed rate hike expectations," Lee Hardman, currency analyst at Bank of Tokyo Mitsubishi, wrote in a commentary obtained by CNBC.
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