The end result of the Federal Reserve's massive easing program won't be pretty for the economy and financial markets, says star mutual fund manager John Hussman, president of Hussman Investment Trust.

"The Fed has now created the third financial bubble in 15 years," he writes in his latest market commentary. "Focusing on two variables — inflation and unemployment — the Fed has missed the most important consideration: the risk to financial stability."

That's what happened in last decade's housing bubble, and "this mistake will ultimately end just as tragically" both for the economy and financial markets, Hussman states.

As for stocks, "our concerns remain extremely high due to the combination of obscene valuations and unfavorable market internals," he explains. The S&P 500 index carried a price-earnings ratio of 21.58 Friday, up from 18.04 a year ago, according to Birinyi Associates.

"While we continue to monitor the evidence for any shift, it's important not to assume that Fed easing (or a delay of Fed rate hikes) would necessarily provoke a favorable shift in market internals, or would necessarily produce a shift back to risk-seeking."

Don't count on a delay in Fed rate hikes boosting stocks, Hussman says. "Examine the worst market collapses in history, and you'll often find the Federal Reserve easing the whole time," he writes. "Don't fight the Fed, indeed."

The Fed has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008. Fed Chair Janet Yellen said last week that the central bank will likely begin raising rates this year.

Many investors are obsessed with the Federal Reserve's efforts to boost the economy, but perhaps they're looking in the wrong direction.

"There seems to be a perception that central bankers are gods (or at the very least minor deities in some twisted economic pantheon)," James Montier, a portfolio manager at money management firm GMO, writes in a commentary.

"Coupled with this deification of central bankers is a faith that interest rates are a panacea. Whatever the problem, interest rates can solve it. Inflation too high, simply raise interest rates. Economy too weak, then lower interest rates."

You might be getting the idea that Montier holds some doubts. Indeed, he does. "This obsession with interest rates as a cure-all rests on some dubious views about the way the world works," he writes. "It would appear that monetary policy isn't the most effective tool for managing the economy."

The government should turn to fiscal policy instead, Montier argues.

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