A good investor always has the exits picked out well in advance of the investment. This is why QE is problematic. Look at its success in Japan.
Yellen is going to have to stay way ahead of inflation. I suspect that Treasury, FDIC, etc. are aware of that hence the increased/increasing reserve requirements. They need to sop that money up and get it out of the economy to avoid serious inflation.
Nomura’s Chief Economist Richard Koo – U.S. Heading For 1900 Percent Inflation Rate
Now let's say he is wrong about 90% of the inflation he's predicting. That's still 190%. Yellen and the FED are in the unenviable position of having to clamp down and stay ahead of inflation every time the economy picks up. It's going to be long and drawn out. I like the way they did things after WW 1. That way worked. I think you'll be eating your words soon, but perhaps it will be me. I will be very surprised if QE works. I think had we let interest rates rise and the economy shake out we would already be seeing real growth in the 5% range.
The other thing is that the FED has near zero control over fiscal policy. Obama and the Democrats (we must never forget that Obama's leaving, but Democrats are forever) are hobbling the economy with terrible policy making.
OK, so nobody knows what tomorrow's prices will bring; what we do know is what's been happening. A few years ago the economy collapsed in a serious bout with deflation, and since then we've had no serious recovery in either general prices or business activity. The Fed's policies have been extreme with regard to interest rates, and it hasn't affected much. The Fed's actions with buying private debt ended years ago, and their treasury holdings have their share of the national debt about what it's been since before Reagan.
Any talk about 'exit strategy' needs a better description of just what it is we're supposed to be exiting.