The S&P 500 closed at 7,542.37 on Wednesday, the Nasdaq climbed another thirteen tenths of a percent, the Russell 2000 added twelve tenths, and every financial page in the country will tell you this is a healthy economy. It is not. Our own market recap from yesterday reads like a ledger from a different country: Communication Services up nearly four percent, the 2s10s spread sitting at 38 basis points, the dollar strengthening against the yen. These are the numbers the men who watch the ticker believe make the republic solvent. They are looking at a scoreboard for a game played entirely in the air, while the ground beneath them is quietly hollowed out.
The indexes do not measure prosperity. They measure the velocity of capital among the people who already have it. That velocity is up. The prosperity is elsewhere, and getting elsewhere-er.
Look at the curve. The 10-year Treasury closed at 4.54 percent, the 2-year at 4.16, and the spread between them widened to 38 basis points. A steepening curve is, in the textbook, a vote of confidence in the future. In the lived experience of anyone who has refinanced a home, paid a small-business loan, or watched a young farmer try to put up a barn, a steepening curve is a transfer. The banks, who were nearly dead six months ago and now sit on the better part of a hundred billion in unrealized gains on their bond portfolios, inherit the difference. The borrower inherits the cost. That is what a “positively sloped yield curve” means when you translate it from the language of the trading floor into the language of the courthouse and the feed store.
The dollar strengthened against both the euro and the yen, small moves, a tenth of a percent each, but in the same direction, and in the same direction every day for long enough that the direction itself becomes the story. A strong dollar is a strong country, the cable-news reader will tell you. A strong dollar is what a country gets when the rest of the world needs dollars more than it wants to sell things for them — which is what a country gets when it has run its productive economy into the ground and is now selling pieces of itself to keep the lights on. The yen at 162.38 to the dollar is not a triumph. It is the Japanese housekeeper paying the rent in a currency she did not earn.
The Russell 2000 closed higher for the sixty-fourth consecutive session above its 50-day moving average. Sixty-four. I have known men whose marriages did not last sixty-four days. The small-caps, the supposed index of the American entrepreneur, the regional bank, the second-tier industrial — sixty-four straight days of liquidity, of momentum algorithms, of ETFs feeding on themselves. The street names in the index are different from the street names on Main Street. The Russell 2000 is not a town. It is a portfolio. And a portfolio that has not had a losing day in two months is not being managed. It is being kept alive.
Communication Services, the sector that holds the platforms, the apps, the streamers, the attention merchants, led the day at +3.77 percent. The sector that profits from the absence of community led the day. Consumer Cyclical came second at +2.73. Energy and Consumer Defensive, the sectors closest to actual physical things, fuel, food, the daily necessities of a working household, both finished in the red, Energy at -1.12 and Consumer Defensive at -1.43. The pattern holds: what can be financialized rises. What must be done in the real world falls. Six of eleven sectors finished green, and the five that did not include the ones the country runs on.
The Dow is up 9.2 percent on the year and the Russell is up 20.6, and the families I know are paying more for groceries than they were in January and less for their houses than they were in 2021. The Nasdaq is up 12.8 percent year-to-date. The county hospital is still short two nurses. These things are simultaneously true, and the people who make a living explaining the indexes to you are professionally unable to notice the simultaneity. The funeral for the productive economy has been going on for some years now, and the music has not stopped. It has just gotten louder.
To be fair to the tape, its original purpose was a genuine coordination of dispersed knowledge. Friedrich Hayek understood that the price signal is a miracle that aggregates the local, tacit knowledge of millions of actors into a single, legible number. A functioning market is a moral good because it respects the limits of any single planner’s mind and honors the real choices of real people. There is supposed to be a real economy producing real things: tractors, wheat, software, steel. The tape is meant to be the shadow of that real thing, a faithful reflection of human labor and material creation.
But the shadow has detached from the object. The tape no longer measures the real economy; it measures the rentier claim on the real economy. I used to trade agricultural futures; I know precisely how little the men in the clearinghouse think about the men in the field. When Communication Services rallies nearly four percent in a single afternoon, it is rarely because a new community was built or a new good was brought to market. It is because an abstraction was traded again, because a monopoly captured another toll, because a stock buyback was financed by loading debt onto a working enterprise. The 10-year Treasury sits at 4.54 percent, and that single number dictates whether a family farm in Adams County can afford the center-pivot irrigation loan, or whether the local hardware store gets priced out of its lease by an institutional landlord in New York. The tape does not care about the farm. The tape does not care about the parish. The tape prices the extraction, and the extraction hollows out the place.
The conservative answer to this financialization is not to smash the market, nor to hand the levers of production to a centralized state. The conservative answer is to rebuild the rooted, distributed institutions that the tape ignores. The counter to the distant shareholder is the member-owner. When I look at the Adams-Columbia Electric Cooperative right here in Friendship — governed by its 31,560 member-owners across twelve counties — the price of electricity is not set by a distant yield curve or a rentier’s required return on equity. It is set by the cost of service, governed by the people who actually flip the switch. The cooperative, the credit union, the mutual, the family farm held in trust for the unborn: these are the mediating institutions that stand between the atomized individual and the concentrated leviathan of capital and state. They are the answer to the curse of bigness.
A nation cannot eat a percentage point, and a community cannot be warmed by a yield curve. The real work of conservatism is to conserve the thing the tape cannot price: the rooted place, the intergenerational trust, the dignity of the man who actually builds the thing. Leave the town its life.