It's no surprise the financial markets are collapsing around the world, according to DoubleLine Capital CEO Jeffrey Gundlach.

Having raised interest rates once already last month, the Federal Reserve is "idiotically saying" they will raise rates another seven times by the end of 2017, he said. This despite the fact that most other central banks around the globe are implementing various rounds of QE. "The Fed has got to dial this rhetoric back or the markets will continue to humiliate them," he declared.

Emerging market equities, which have been declining since 2011, "could fall another 40 percent," Gundlach told attendees at the ninth annual Inside ETFs conference in Fort Lauderdale, Fla., adding that there was "nothing but air" beneath them. The collapse in most commodity prices are a symptom of the problem, not the cause in his view.

Gundlach didn't explicitly link a coming collapse in emerging markets to the language of Fed governors. But like many critics of the central bank's newfound hawkish stance, he implied that the collateral damage could be most severe in the fragile economies of developing nations.

The Shanghai composite "is going to 2,500," he predicted, admitting this would have been a bold call when that index stood at 4,000 a few years ago. Today, the index sits at 2,900, so it would only take a few more bad days in China to get there.

Gundlach called China's claim that its GDP grew 6.9 percent last year "a joke." In his estimation, the real number might well be negative.

Brazil's finance minister is calling for GDP growth of negative 2 percent, and finance ministers are notoriously optimistic.

But Gundlach saved most of his criticism for the Fed and what critics have called its "open mouth" policy. He explained that many other central banks around the world thought the coast was clear in 2011 and raised interest rates, only to panic and quickly reverse course. Many have now taken the radical step of moving to negative interest rates.

With U.S. GDP growing at 2.2 percent per year and the Eurozone's GDP expanding at 1.6 percent, the Fed is out of step with global reality, he said. Moreover, Europe's current growth trajectory appears to be headed for an uptick while the U.S. could well be decelerating.

"The Fed is worried wages" in America could turn up, but what's wrong with the middle-class getting a raise after 15 years of zero or negative real wage growth. Gundlach commented that the Fed's priorities flew in the face of a widespread general consensus that income inequality is a serious problem.

A look at the U.S. junk bond market reveals that the American economy's problems can't simply be blamed on the vertiginous fall of oil prices. The spread between junk bonds and Treasurys has widened to 800 basis points.

"That usually indicates a crisis," he said. Junk bond yields today are higher than they were three weeks after Lehman Brothers filed for bankruptcy in 2008.

One ominous harbinger of trouble to come may be found by looking back at the surge in junk bond issuance, which soared between 2012 and 2014. That sign of investor willingness to reach for yield and take on additional risk often occurs late in an economic expansion.

Gundlach also displayed two charts tracing the performance of leveraged loans over the last few years. One group liquid leveraged loans and the other was illiquid. In recent months, liquid leveraged loans have swooned faster than their illiquid counterparts. One possible interpretation is that the illiquid vehicles could quickly follow once investors can sell them. 

Nominal GDP, a favorite indicator, is falling and the Fed had never raised interest rates in this environment. In 1982, they tried and immediately reversed themselves.

The only major expense rising in America today is housing, a significant cost for most people. "I thought everyone wanted the economy to grow," Gundlach said. "Put [all the Fed governors'] forecasts together and you get a hall of mirrors."

As for the U.S. stock market, it is "whistling past the graveyard."