The Federal Reserve has been easing monetary policy for almost seven years, yet the economy hasn't responded with sustained strength.

GDP growth has averaged only about 2.2 percent during the recovery that began in June 2009.

"So why did the monetary base increase not cause a proportionate increase in either the general price level or GDP?" St. Louis Fed Bank researchers Yi Wen and Maria Arias ask in a report on the bank's website.

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"The answer lies in the private sector's dramatic increase in their willingness to hoard money instead of spend it. Such an unprecedented increase in money demand has slowed down the velocity of money."

The personal saving rate, which measures personal saving as a percentage of disposable income, rose to 5.7 percent in July from 5.4 percent in June, the highest rate since December 2012.

And what's causing the hoarding?

"A glooming economy after the financial crisis [and] the dramatic decrease in interest rates that has forced investors to readjust their portfolios toward liquid money and away from interest-bearing assets such as government bonds," Wen and Arias write.

"The unconventional monetary policy has reinforced the recession by stimulating the private sector's money demand through pursuing an excessively low interest rate policy (i.e., the zero-interest rate policy)."

Meanwhile, Harvard economist Martin Feldstein has argued for at least two years that the Fed's easing program is ineffective.

Central bank policy is creating too much risk in the financial system, he tells CNBC. "Very low interest rates are driving lenders into taking risks, low-quality loans [and] investors into buying junk bonds with low spreads."

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