Ironically, greater quantities of money in the economy have translated to more anemic economic activity and lackluster employment growth.

Since the inception of the Great Recession, the monetary base of the Federal Reserve grew four-fold, from nearly $1 trillion in September 2008 to roughly $4 trillion today. Yet we do not have much to show for it in the real economy of goods, services and labor.

During this time, the nominal gross domestic product rose 25 percent – from $14.4 trillion to $18 trillion. The annual growth rate of final retail sales in the seven years since the pre-recession peak has averaged a paltry 1.1 percent, compared with 2.5 percent during the seven-year-cycle following the 2000 slide and 3.5 percent from 1950 through 2000, according to David Stockman, the Director of the Office of Management and Budget under President Reagan.

Total non-farm employment grew 9 percent – from approximately 130 million in 2009 to 142 million today, a net 6 percent increase after adjusting for population growth of the working age population, ages 15-65.

However, too much of this gain has come in the form of part-time employment and fiscally dependent sectors of health, education and social services.

Compare this real economy to the financial economy, and you might gasp. The value of financial assets skyrocketed roughly 200 percent since early March 2009: the S&P 500 index rose to 2100 from 700, and the Dow Jones Industrial Average reached 18000 after falling to 6600.

How can this be?

Since September 2008, three-month Treasury bill rates have been near zero percent. The additional money or liquidity provided by the Fed was used to invest in financial assets, such as equities and bonds, rather than real goods and services.

The result was a vast increase in demand for these financial products and the associated price increases, which brought yields on these assets in line with the 3-month Treasury bill. (Yield equals net income from the security divided by the price.)

Since most money flowed into these financial assets for speculation and arbitrage activities, not much was directly invested in labor and capital to produce tangible goods and services in the real economy. Therefore, the turnover or velocity of money declined, causing anemic economic activity.

Empirically, it has been demonstrated that once the 3-month Treasury bill rate falls below 1 percent, additional monetary injections into the economy are essentially offset by reductions in monetary turnover or velocity, causing economic stagnation.

Since 2008, the monetary base exploded 300 percent, while monetary velocity plummeted 75 percent, according to the Federal Reserve.

It has been demonstrated that real interest rates above 1 or 2 percent enhance the effectiveness and efficiency of investment, productivity and economic growth.

Typically, higher rates generate more competition amongst entrepreneurs to attract savings and investment in their productive activities. Lower rates do the opposite and encourage refinancing of existing assets that are highly unproductive compared with investment in new assets.

The gross rate of investment since the pre-Great Recession peak is lower than 1 percent per year, while the net rate – after depreciation – is 20 percent lower than the 1999 level, says Stockman.

He cites credit market debt plus the market value of all equities was 212 percent of GDP in 1981; this figure has skyrocketed to 537 percent today, a reflection of an unproductive economic system too reliant on the financial sector.

To increase investment, productivity, employment and income, we need to put growth first.