"We are in an epic bond bubble globally where higher inflation would be kryptonite. With the bond monster central bankers have created, the last thing they should want is higher inflation."

Let me expand on the first issue of inflation. Central banks in the U.S., Eurozone, UK and in Japan have tethered their monetary policy decisions on growth certainly but also the desire for 2 percent annual inflation. There is no science to this 2 percent number, it is all art.

The reason for this target and desire for this level of inflation is a matter of control. While they like to keep interest rates artificially low, they also understand the need to have them higher than they are in order to respond to any economic challenges. The fallacy with this theory that higher inflation is good and deflation is bad, is inflation is just a symptom of underlying supply and demand and technological improvements, and thus shouldn't be manipulated.

Was higher inflation a growth driver for Venezuela? Also, why is a lower cost of living and technological progress that leads to lower prices a bad thing?

With $13 trillion of negative yielding bonds, and another $10 trillion plus yielding between zero and 1 percent, higher inflation would be the needle that pricks this massive bond bubble. Thus, we can see the dangerous loop that central bankers have put themselves in.

They slash and burn rates in order to generate higher inflation but then create the powder keg of danger if they are actually successful one day. Unfortunately, I believe they will be. Mario Draghi himself said back in November 2015 while he was furthering policy down the rate hole of negative interest rates and quantitative easing that he wanted inflation higher "as quickly as possible." With German yields negative out 10 years, imagine what happens to the bund market if he gets what he wants. We will see massive investor losses and a sharp rise in the cost of capital for both businesses and consumers.

The Japanese government bond market has been the most immune to upticks in inflation, however microscopic, because the Bank of Japan and domestic owners of bonds dominate. That said, with the BoJ reaching clear logistical limits to its bond buying and clear disgust by so many, particularly the Japanese banking system, with negative interest rates, have we seen the low in yields in Japan? I believe we have.

Williams' second point that they will need to rely more on unconventional tools is evidence of a disease that many central bankers seem to have. That is the inability to acknowledge their own mistakes and limits to their econometric models. Humility is not a characteristic of a modern day central banker because of their innate need to always want to 'do something' regardless if there is any evidence of its efficacy.

Comments today from New York Fed President Bill Dudley, the third in command at the Fed, also make me question the Fed's credibility. He said, "We're edging closer towards the point in time where it will be appropriate, I think, to raise interest rates further" and that September is "possible."

He went on to say the "the market is complacent" on this possibility. Rather than stir up any concerns with a hike, the market is basically yawning as odds for a September move went from 18 percent to just 24 percent. I'll steal this line from my friend Peter Tchir: The Fed is the Boy Who Cried Rate Hike.

Commentary by Peter Boockvar, the chief market analyst for the Lindsey Group and co-chief investment officer at Bookmark Advisors. Follow him on Twitter @pboockvar.



For more insight from CNBC contributors, follow @CNBCopinion on Twitter.