Tracking Monetary Policy

Brad DeLong argues that interpreting Fed policy by watching monetary aggregates is pointless.

The problem with vulgar monetarism--in all of its different and contradictory branches--is that it never acknowledges that different measures of the money stock frequently say different things. The M1 and M3 measures of the money stock were giving wildly different assessments of the state of monetary policy in the late 1990s.

Instead, he points out that real interest rates are a much better indicator of both the intent and impact of monetary policy. That is, you see high real interest rates when the Fed is trying to slow the economy and low real interest rates when the Fed is trying to stimulate the economy.

Discussion Question. Recently, the real interest rate on Federal Funds has been below zero. Does this mean that the Fed is stimulating the economy? If so, has this been successful?