But check out this Q&A the White House special adviser for consumer affairs did with Kiplinger Personal Finance. It appears in the magazine’s January 2011 issue.

In it, she lays out her very rational and reasonable goals for the new Consumer Financial Protection Bureau, which she’s helping to establish and which should open for business in July.

As usual, Warren doesn’t mince words when discussing the shady tactics of credit card and mortgage companies.

It’s no wonder all of those Republican lawmakers who are in the pocket of the banking industry tried to block creation of the new consumer protection bureau, which was Warren’s idea, and have vowed to fight any effort to make Warren its first director.

She’s a woman who can speak truth to power — and power doesn’t like it.

The Harvard University law professor has been one of the few champions consumers have had since the financial struck in 2008.

But she’s also willing to speak as candidly to us.

Just look at Warren’s answer to Kiplinger’s last question.

What can we do before the consumer protection bureau to become a reality?

Get rid of your credit card debt, was her response.

“Anyone who carries credit-card debt from month to month is in financial trouble,” Warren said. “This is not a normal state, nor is it sustainable over time. Not paying off that credit card is always a bad sign, so pay it off. That’s my best advice.”

Smart lady.

The Federal Reserve announced a second round of what’s called “quantitative easing” today, in a misguided effort to boost the economy by driving interest rates even lower.

The government-controlled bank will buy another $600 billion in long-term Treasuries — 2 ½ to 10-year bonds — over the next eight months.

That’s on top of the $1.725 trillion in government bonds and mortgage securities it bought in 2008 and 2009.

Oh, and it will use the $250 billion to $300 billion it expects to earn from that investment to buy more Treasuries, as well, for a total of as much as $900 billion in new purchases.

While flooding the bond market with money will undoubtedly push interest rates lower, no one believes it will have a significant effect on economic growth or job creation, as the New York Times and Financial Times have already pointed out.

But the Fed’s action will devastate savers, who are already suffering from record low returns on bank deposits and government bonds.

Chairman Ben Bernanke has shown little concern for us as he’s desperately tried to fix the economy he broke by failing to stop all of the reckless lending that led to the banking crisis and recession.

We apparently have no right to earn a reasonable return on our savings.

Indeed, part of the strategy of quantitative easing is to drive interest rates to such a depressing level that we’ll be forced to pull our money out of CDs, savings and money market accounts, and put it into investments that are riskier, but will supposedly drive more growth in the economy.

Think corporate stocks and bonds here.

But America’s biggest companies are now sitting on something like $1 trillion in cash. If they want to expand and hire more workers, they’ve got all the money they need.

As for the Fed, it already owns about 12.5% of all outstanding Treasury bonds and notes. By the time QE2 is over, it will own more than a quarter of all outstanding Treasuries.

Click here to read more about today’s Fed meeting.

Why?

Maybe it’s because the Fed’s campaign to drive interest rates down is intended to force savers out of safer investments such as CDs and Treasuries, and into the riskier investments such as the stocks Cramer sells on his show.

Indeed, the former hedge fund manager began last night’s show by saying “I’m going to dispel one of the myths that is keeping you out of the market or in CDs, and that’s the myth of the ‘fragile economy.’

“I swear, if I’ve got to read one more article about the ‘fragile recovery’ I will tear out all my remaining hair.”

Cramer argues that economic growth in most of the world “is very real.”

The recovery is just lagging in the United States because President Barack Obama was pursuing the wrong policies — health care reform and reregulating the financial industry — instead of stimulating economic growth as other countries did.

Ok, fair enough.

But then this champion of free markets goes on to support the Federal Reserve’s relentless, radical intervention in the economy?

“I firmly believe the Fed is the adult in the room and it will create jobs with this QE2,” he says.

Really?

By “QE2″ Cramer means the Fed’s second try at a strategy called “quantitative easing.”

I am certainly more skeptical about its success than Cramer. (Click here to read more about how this strategy is supposed to work: Can’t Anyone Stop The Fed’s Rate Cutting?)

This morning’s New York Times reports that “most economists say it is unlikely to have a big impact on employment and growth.”

Would it be too cynical to suggest that Cramer’s own selfish interests might be behind his willingness to abandon free market principals in this instance — and back the Fed?

It certainly seems that we’ve found a grossly interventist government policy that he can get behind.

It’s the kind of federal intervention in the economy he can apparently get behind.

So what if you can’t earn a fair return on your CDs? Just put your money in the stock market — and watch “Mad Money” for tips on what to buy.

It hopes to make the already rock-bottom rates on Treasury bills and other long-term loans even lower on the questionable assumption that the lure of cheap money will make corporate America more likely to borrow, expand and hire.

The tactic is called “quantitative easing,” and this round of Treasury purchases is being referred to as QE2 since the Fed has been to this well once before.

It bought $1.725 trillion in assets in 2008 and 2009, and is expected to approve buying another $500 billion over the next six months when its key rate-setting committee meets next week.

Today’s edition of the Financial Times has one of the best explanations I’ve seen about how all of this is all supposed to work.

But I think the Fed is kidding itself and this won’t turn our sputtering recovery into a roaring, job-creating machine.

The Times makes much the same point, noting that lower interest rates don’t mean much “when banks do not want to lend and consumers do not want to borrow.”

About all it can say is that advocates for QE2 “argue that lower interest rates will surely help at least a few more borrowers at the margin.”

What the Times doesn’t say is that there’s a price for helping a “few more borrowers at the margin,” and that’s prices is being borne by savers who aren’t getting a fair return on their money.

How long do we have to keep getting the crap kicked out of us in the name of stimulating the economy?

The Federal Reserve has already made it incredibly cheap to borrow money for almost anything. Does anyone think that making it even more incredibly cheap to borrow money will make a significant difference?

Didn’t we reach the point of diminishing returns a long time ago?

Haven’t we seen enough evidence that these ultra low interest rates are becoming counterproductive?

Don’t we understand that companies are tempted to use all this cheap money to buyout competitors and eliminate jobs rather than build new factories and add to the workforce.

Two psychologists, Dan Ariely of Duke University and Michael Norton of Harvard University, asked thousands of Americans how they think wealth in this country is distributed.

Respondents estimated that the wealthiest 20% of all Americans control 59% of the nation’s wealth.

In reality, they own around 84%.

Then Ariely and Norton then asked respondents what they consider to be an ideal distribution of wealth for America.

In a perfect world, they said, the wealthiest 20% of all Americans would control just 32% of the wealth.

The obvious conclusion is that Americans think the nation’s wealth is far more evenly distributed than actually it is, and want it to be shared even more equitably than they (wrongly) believe it to be.

That made me wonder, how much must you have to make it into that magical top 20%?

I looked all over the place trying to nail that number down.

But the recession resulted in so much volatility in the markets and personal wealth that older stats on net worth are meaningless.

The best I could find was a recent estimate that your family needs a current net worth of 900,000 to be in the top 10%.

So I suspect something like $350,000 to $400,000 should be enough to make the top 20%.

Don’t know your net worth?

Our net worth calculator can help you figure it out.

Last year I pointed out that efforts to modify unaffordable mortgages were failing because lenders refused to hire enough people to deal with all of their reckless loans.

Now it appears they also didn’t hire enough people to legally process all of the foreclosures created by their refusal to modify those mortgages.

Depositions suggest that the few employees who were hired to push foreclosures through the system were hair stylists, retail clerks and factory workers who were woefully unprepared to do their jobs.

They were derisively known as “Burger King kids” at JPMorgan Chase & Co., according to the New York Times.

Now we’re told that these “robo-signers” were putting their names on as many as 10,000 affidavits a month that claimed — fraudulently claimed — they had verified all of the critical information needed to meet the legal obligations for repossessing a home.

The banking industry’s latest foul-up has thrown the foreclosure process into chaos and caused many of the major mortgaging servicers to suspend foreclosures until the legal morass they’ve created can be sorted out.

Although that’s the right thing to do, it will further slow the recovery.

The housing market is still acting like a huge anchor on the economy.

How can we possibly have a vibrant, growing economy when 11% of all mortgages are in default or foreclosure, and millions of repossessed homes are wreaking havoc on the housing market and property values?

Yet the new scandal over the accuracy and legitimacy of the documents lenders need to clean up their old scandal could add years to the whole sorry process.

So with no real recovery in sight, the Federal Reserve seems determined to keep driving interest rates down in an increasingly desperate attempt to stimulate spending.

Indeed, the government-controlled bank is widely expected to resume buying billions of dollars worth of federal bonds after its next policy meeting on Nov. 2-3.

That will undoubtedly push the pathetic returns on bonds and bank deposits even lower, while having very little impact on the GDP.

But are the higher rates Indian savers earn being eaten up by inflation?

Unfortunately it appears they are.

We found reports from India that says consumer prices are rising at an annualized rate of more than 10%.

So the typical 1-year CD in India is paying a couple of points less than the inflation rate.

In the U.S. the annualized inflation rate was just 1.1% in August (the change in the CPI from August 2009 to August 2010).

That means our average 1-year CD is also failing to keep up with inflation, but by less than one percentage point.

Woo-hoo. The buying power of our savings is eroding more slowly than it would in India even though its banks are paying higher interest rates.

Somehow that doesn’t make me feel any better about the pitiful returns I’m earning on my savings, or the Federal Reserve’s refusal to change its punishing policies, which are driving interest rates lower and lower.

Now it’s only taking a couple of weeks.

A recent story in the Milwaukee Journal Sentinel tells the story of Tom and Carol Spidell, who were customers of Maritime Savings Bank, which failed on Sept. 17.

Before the month was over they “received five letters – one for each certificate of deposit they had with Maritime — informing them that the interest rates on their CDs had been slashed.

“For the Spidells, that meant the interest on a CD that doesn’t mature until next spring will be paying about a half-percent instead of the 3.05% they signed up for a couple of years ago. Other Maritime CDs with interest rates ranging from 1.5% to 1.95% also were pared to 0.45% or 0.55%, all of them with roughly a year to go before they mature.”

Now North Shore Bank, which bought Maritime Savings Bank from the FDIC, was well within its rights to cut those rates.

As FDIC spokesman David Barr told the Journal Sentinel: “Every time a bank fails now, the acquiring institution has the option to lower the interest rates.”

Steve Steiner, a senior vice president at North Shore Bank, told the paper that Maritime’s CD rates were out of sync with the market.

“Maritime clearly has paid higher-than-market rates because of their previous financial condition,” Steiner said.

He told Journal Sentinel that his bank offered competitive rates but “prefers customers who want to do all or most of their banking with one bank instead of people who move savings from bank to bank in pursuit of the best yields.”

Fair enough.

But Tom Spidell claimed to be a longtime Maritime customer. He considered the rate-cutting letters “an insult” and said he would move his savings elsewhere.

So I called Steiner and politely acknowledged North Shore’s right to cut Maritime’s rates, but asked if the bank had considered the implications this had for North Shore’s customer relations.

Steiner immediately labeled the question as “adversarial,” and said “I don’t know why I have to explain myself to you.”

And he doesn’t.

The Spidells experience reflects the sorry situation savers find themselves in.

The Federal Reserve’s cheap money policy has made our savings inconsequential.

Banks can cut rates without worrying about offending us, or that we’ll take our money elsewhere. They don’t need it and where are we going to go?

The average return on 6-, 12-, 24-, 36- and 60-month certificates of deposit all reached new record lows in Bankrate’s latest weekly survey, taken Oct. 6.

Our sympathies to the Spidells — retirees who will simply have to live on less because of this.

And I’ve got to say that those complaints are soooooo unattractive.

What the law does is require banks to maintain at least a 5% interest in the mortgages, credit card debt and auto loans they bundle and sell to investors.

The idea is that they’ll vet borrowers more closely if they can’t pass all of the risk along to someone else.

Some loans Congress considers safe, such as traditional 30-year fixed-rate mortgages with at least a 20% down payment, are even exempted from the 5% requirement.

So what we’re really talking about is trying to make the banks act more responsibly when they agree to more risky loans such as interest-only or adjustable rate mortgages.

In my view, this is the absolute least we can ask of the banking industry.

These are exactly the kind of loans that nearly wrecked the financial industry two years and pushed the economy to the brink of another Great Depression.

If I had my way, we’d ban the securitization of consumer debt and require the banks the keep all of the loans they make.

That’s the way the financial industry worked before banks began packaging consumer debt to sell to investors in the late ’80s, and the system worked very well.

Bankers embraced selling the loans they made because they were always grousing about the risk involved in making long-term loans (primarily mortgages) with money from short-term deposits (think savings accounts and CDs.)

There was some truth to that.

When interest rates went up the spread between what banks had to pay for deposits and what they were collecting from the mortgages they held, did narrow and reduced their profit.

What bankers never seemed to mention was the nice boost they got when rates went down and that spread increased.

Everyone took for granted the stable and ethical banking industry this system created.

The 5% rule is not a modest effort to rein in irresponsible lending. It’s a minor effort to rein in irresponsible lending.

It’s time for the banks to stop bitching and moaning about every new rule or regulation that tries to restore public faith and confidence in their industry.

First, I’ve been complaining about big companies hoarding cash since last summer.

Just last week Jen Stryker touched on the same theme, explaining why consumers can’t rescue this recovery, but cash-rich companies can.

In a story headlined “Easy Borrowing By Corporations Spurs Few Jobs”, the Times explains how companies are using ultra-low interest rates created by the Federal Reserve to borrow billions of dollars they’re just stuffing into the mattress.

Few “of them are actually spending money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves,” the Times says.

“The development presents something of a chicken-and-egg situation: Corporations keep savings, waiting for the economy to perk-up – but the economy is unlikely to perk up if corporations keep saving.”

Then the Times finally acknowledges something that the mainstream media has ignored ever since the financial crisis struck nearly two years ago.

“The Fed’s low rates have in fact hurt many Americans, especially retirees whose incomes from savings have fallen substantially,” the story says.

Well, duh.

We’ve been screaming about that for months.

So here’s what needs to happen:

• The Fed needs to ease up on its radical market distorting policies and allow interest rates to rise at least a little back towards reasonable rates.
• Corporations sitting on a big pile of cash need to significantly boost their dividends and give that money to their shareholders. If they won’t spend it, we will.