The United States wonder boy has already won five gold medals at Beijing and is expected to win another three.
In his three Olympic Games, he has won a record 11 gold medals.
"Michael is a very talented swimmer and is showing it in the water," Loader said.
"He is doing so well and it is awesome to see him swim.
"He is one of the best swimmers of this age. Every time he gets in the water for a final, he is breaking a world record. You can't help to be in awe of him and watch him swim and see what makes him tick."
Although impressed by the performances of Phelps, Loader was not prepared to rate him as the best swimmer of any age.
"That would be a bit presumptuous on those who will follow in his footsteps," Loader said.
"He has just set the standard a lot higher than it is at the moment.
"It is a standard for other swimmers to follow on from. I hope that other swimmers can replicate his times and even go beyond them.
"If I was a young swimmer, that is what I'd be trying to do."
Loader said that there was an Otago connection with Phelps because he came to Dunedin in 2003 and did some work with master coach Duncan Laing.
Loader retired from competitive swimming in 1999 and never met or raced against Phelps, who was aged 15 when he competed in his first Olympic Games at Sydney in 2000.
Loader does not know why Phelps has been so successful.
"I have not been privy to his training or anything else like that," Loader said.
Loader, New Zealand's best-performed international swimmer, won three Olympic medals - silver in the 200m butterfly at Barcelona in 1992 and double gold medals in the 200m and 400m freestyle at Atlanta in 1996.
The only other New Zealand swimmers to win Olympic medals have been Malcolm Champion, relay in 1912 (gold); Jean Stewart, 100m backstroke, 1952 (bronze); Paul Kingsman, 200m backstroke, 1988 (bronze); and Anthony Mosse, 200m butterfly, 1988 (bronze).
Loader was pleased with the performance of Moss Burmester in finishing fourth in the 200m butterfly.
"He did a very good job," Loader said.
"It was a very talented field and he looked in very good form all the way through. He swam a very good race."
Loader won his two gold medals at Atlanta in 1996.
Was he surprised that it has taken another 12 years for a New Zealand swimmer to make another Olympic final?
"My performances overshadowed the level of New Zealand swimming at that time," Loader said.
"New Zealand swimming has had to pick itself up from virtually nothing to get where it is today. I think it is a marvellous achievement."
