Whenever I increase the effect level on my JMP, the overall volume goes down. Can anyone explain this to me or how to fix it?

It's because you're changing the mix between the amp level and effects. The more you increase the effects level on the amp, the more mix your effects will have and the less your amp will have and vice versa.

If you want a balance between the two, just set it to half way.
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Several drinks ago I might have been able to answer this..

There is a level button +4/-20 db on the effects loop. Sounds like you might have it on the -20 setting.