Financial analyst and president of the Federal Reserve’s San Fransisco Bank, Janet Yellen publicly called to the Federal Reserve to develop a timely and effective exit strategy for federal loan and bailout packages, Sunday, saying that this strategy of economic interventionism is too new to be guaranteed effective.

The $2 trillion U.S. - an amount that could be nearly 10 per cent of the total money supply - that has been created by Federal Reserve bailout programs and loan packages could have a hugely negative inflationary effect on the value of the U.S. dollar, if not controlled and subject to a strict exit strategy.

“Many of the interventions are novel, so no straightforward methods are available to quantify their effectiveness. The Fed must ensure that it has an exit strategy to wind down the facilities in a timely and effective way when they are no longer needed,” claimed Yellen in a San Fransisco speech, Sunday afternoon.

Many economists are reporting that 2009 is expected to be a year of further contraction - or at least, stagnation in the economy - Yellen herself claimed that the end to what started as a simple financial crisis, is simply not here. Job losses are expected to rise in the first quarter, and deflation, Yellen expects, should begin to occur this quarter, as banks and other financial institutions continue their low loan issuance.

“I’m strongly supportive of a substantial fiscal stimulus package,” Yellen added, praising President-elect Barack Obama’s injectionary expansion plans. “If ever, in my professional career, there was a time for active, discretionary fiscal stimulus, it is now.”

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