Don't Bet on Exit Strategy from the Fed: Economists

There is still a long way to go for the US economy before it gets better, and a long-term strategy to deal with the increasing budget deficit is needed for the Federal Reserve's quantitative easing policies to be successful, economists told CNBC Tuesday.

Investors who are betting on the Federal Reserve reversing its quantitative easing policy soon are over-reacting, Robert Barbera, author of "The Cost of Capitalism," told CNBC.

"Ninety days ago we were worried about depression and now we are meant to worry about inflation, that makes my head spin too fast," Barbera, who spent 26 years as a Wall Street economist, told "Squawk Box."

Commodities prices surged and long-term interest rates have risen as more and more investors think the Fed will have to implement an exit strategy sooner than expected.

"Again, I don't think that Ben Bernanke right now is sweating bullets about 'Jeez, I really have to reverse this trade,'" Barbera said.

Historically, commodities' prices move in line with the economy, but last year, during the surge in the prices for oil, gold and others, money from hedge funds was breaking that tradition, he added.

'Show me the Money': Mishkin

The rise in long-term interest rates had an element of good news in it, but also showed some lack of confidence from investors, Frederic Mishkin, professor of economics at Columbia University, and former Federal Reserve Board governor, told CNBC.

"It's not just what the Fed needs to do. Some of the good news from the rise in long-term interest rates is that the economy is improving," Mishkin said.

"There's a very bad news aspect…the concerns on where we are in terms of our fiscal situation," he added. "We're really worried about a fiscal train wreck and we know that if fiscal policy becomes unsustainable, no central bank in the world is going to be able to keep inflation under control."

Bi-partisan efforts are needed to show the country was serious about tackling budget deficits 5 to 10 years down the road, according to Mishkin.

"The issue here is, show me the money. You actually have to take steps to actually show that you're serious," he said.