Former Reagan OMB director David Stockman told CBN on Thursday the stock market is teetering on the edge of a massive and unprecedented collapse.

"I think it's pretty obvious that the top is in," Stockman said, noting that the S&P 500 has traded at a historical low for most of 2015. "It's just waiting for the knee-jerk bulls, robo traders and dip buyers to finally capitulate."

The Federal Reserve and central banks around the world have created a dangerous situation by manufacturing a monetary bubble and a central bank-driven credit economy that will result in a "debt supernova," Stockman warned.

"It has to do with the the fact that the world economy, including the U.S., is heading into what is clearly going to be an epochal deflation to the likes of what we have never experienced in modern time," he added.

"The whole global economy since 2008 has been driven forward by this massive investment and construction and borrowing spree in China. The point that I'm making is that it's over."

Rapid Market Decline

The summer has witnessed a steady decline in US stocks, a pattern that is repeating the market behavior of 2008 when the Dow fell by nearly 700 points.