by Jan Skoyles, Editor Mark O’Byrne

In case you’ve been hiding under a rock, the Dow Jones Industrial Average reached 20,000 earlier this week for the first time in its 132 year history to much media fanfare.

Bigcharts via Financial Sense

Since Trump’s election US market indicators, including the Dow have been ticking up – it has been labelled the Trump rally. This latest milestone is something that the new President is happy to take credit for. In fact, he tweeted ‘Great! #Dow20K’ in response.

He told ABC News that

“We just hit a record, and a number that’s never been hit before. So I was very honored by that … Now we have to go up, up, up …”

Trump’s senior advisor (and fellow advocate for a weaker dollar) Anthony Scaramucci took to Twitter to thank President Trump for bringing about the best stock-market performance after a presidential election win since 1900. UKIP Leader Nigel Farage agreed that this was thanks to the Donald and saw it has a ‘huge vote of confidence in @POTUS.’

us-national-debt

Few commentators pointed out that this latest ‘bubblelicious’ Dow milestone of 20K comes at a time when the U.S. is drowning in a sea of red debt as debt levels continue to surge and will reach the even more important milestone of $20,000,000,000,000 (trillion) in the coming weeks. The digit two is in both and both have a lot of zeros but the latter is actually much more important than the former.

In value terms, the 20,000 milestone means very little. In fact, in real value terms (when priced in gold) the Dow isn’t much higher than when it first hit just 1,000 back in 1972.

Make America Great Again has to mean Make America have Value Again

The Dow has had an impressive performance since November 8th, it has climbed around 9.5%. The actions of Trump since both his election and inauguration (from tweets to signing Executive Orders) have driven positive market reactions … so far.

There is little doubt that since his inauguration the new President has worked hard to show that he will make good on his election promises. All of which come under the umbrella to ‘Make America Great Again.’ In turn, market activity does show signs of what Keynes would have called ‘animal spirits’ – the self-feeding frenzy in markets when confidence is high.

dow-gold

As a result, it appears US markets are doing well and so the DJIA reaches a new all-time high in nominal dollar terms. But, as we have learnt from both Obama’s administration and all the others before that, there is a serious falsehood in claiming new records in markets really mean something, particularly when you are basing your information on an already flawed monetary system involving the increasingly debased currency that is the dollar, not too mention currencies internationally which are all being debased.

The Dow has been on a winning streak since 2009, in the period of Obama’s two term presidency the index climbed 144%, the S&P 500 172% and the Nasdaq Composite 275%. No-one can claim that this was all thanks to the Obama administration and some argue that it is not a reflection of what the 44th President really did for the economy given the actions of central banks both at home and abroad – involving QE on an unprecedented scale and an unprecedented monetary experiment in zero percent and negative interest rates.

It is worth noting that Venezuela and previously Zimbabwe had the best performing stocks markets in recent years.

In fact, whilst Trump will be keen to beat Obama’s stock market performance figures, he was a vocal critic of the ‘falsehoods’ upon which his predecessor based his economic KPIs on. We wonder if Trump will remember this when he continues to publish self-congratulatory tweets about the DJIA’s success.

DJIA – the wrong way to value investment performance and