David Stockman, White House budget director under President Reagan, has been warning for some time that central banks' massive easing programs will end in catastrophe for the global financial system.

And he's not backing down from those views now.

"The worldwide central bank money printing spree of the last two decades has generated massive excess capacity and mal-investment all around the planet," Stockman writes on his blog.

The Federal Reserve has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008 and inflated its balance sheet to $4.5 trillion through quantitative easing.

"What is coming, therefore, is not their father’s inflationary spiral, but an unprecedented and epochal global deflation," Stockman states. In the United States, consumer prices were unchanged in the 12 months through February.

"So the central banks just keep printing, thereby inflating the asset bubbles worldwide. What ultimately stops today’s new style central bank credit cycle, therefore, is bursting financial bubbles," he says.

"That has already happened twice this century. A third proof of the case looks to be just around the corner."

As for U.S. asset markets, the S&P 500 index has tripled from its March 2009 low, and the 30-year Treasury yield hit a record low in January.

Meanwhile, Mohamed El-Erian, chief economic adviser at Allianz, says financial markets have grown addicted to central bank easing, and that addiction could cause a heap of trouble when central banks tighten the credit spigot.

"The market is in love with the central bank trade because it has paid off," he told CNBC.

But now the Fed has begun to reduce its stimulus. Many economists expect it will begin raising interest rates in September.

"It reminds me a little bit of 2007 and 2008," when investors tried to discern when the turn would come away from easy credit conditions, El-Erian said. "I'm not so confident that I will see the turn coming, and turns tend to happen quite quickly."

In 2008, of course, the global financial system suffered its worst crisis since the 1930s.

El-Erian criticized the Fed for its cautious approach on raising rates. "They should be a little bit less timid and realize the main risk to the economy comes from mounting financial imbalances that could threaten instability down the road."

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