Why Tomorrow Is The Most Important Day In The Markets

If you haven’t been paying attention, you could be forgiven for not understanding just how important tomorrow is for the markets.

Tomorrow is day two of two-day meetings being held by the Bank of Japan’s monetary committee and the Federal Reserve’s Federal Open Market Committee (FOMC).

Right now, it’s not what central bankers with god complexes say that matters – even though, yes, they move markets with what they say and even what they don’t say.

It’s what they’ve done and what’s going to happen – no matter what they say – that matters now.

Forget the gobbledygook, cryptic blathering spewing down from Mt. Olympus.

Here’s what going to happen tomorrow – and beyond…

Three Things You Need to Know About Central Banks

Before we dive in, there are three facts you probably don’t know – but you absolutely need to know – about central banks.

Number one:

All central banks, in all their iterations, whether they’re a branch of government, quasi-independent institutions, or private corporations whose shareholders are big banks and elitist bankers, which is exactly what America’s Federal Reserve System is, are all in bed with their governments.

They couldn’t exist otherwise. They’re given the power to manipulate interest rates, mostly through “open market operations,” where they go into financial markets (without any capital to speak of) and buy and sell trillions of dollars’ worth of government bills, notes and bonds to move interest rates up and down, for two reasons:

1. They can buy all the government-issued debt they’re asked to buy so governments can run unlimited deficits without immediately adversely impacting interest rates;
2. They can be blamed by politicians if there’s no economic growth or high inflation due to too much government borrowing, relieving politicians of the blame for high unemployment or high interest rates.