David Foster Wallace on the familiar & the strange

From Larry McCaffery’s “Conversation with David Foster Wallace” (Dalkey Archive Press at the University of Illinois: Summer 1993):

If you mean a post-industrial, mediated world, it’s inverted one of fiction’s big historical functions, that of providing data on distant cultures and persons. The first real generalization of human experience that novels tried to accomplish. If you lived in Bumfuck, Iowa, a hundred years ago and had no idea what life was like in India, good old Kipling goes over and presents it to you. … Well, but fiction’s presenting function for today’s reader has been reversed: since the whole global village is now presented as familiar, electronically immediate—satellites, microwaves, intrepid PBS anthropologists, Paul Simon’s Zulu back-ups—it’s almost like we need fiction writers to restore strange things’ ineluctable “strangeness,” to defamiliarize stuff, I guess you’d say.

… For our generation, the entire world seems to present itself as “familiar,” but since that’s of course an illusion in terms of anything really important about people, maybe any “realistic” fiction’s job is opposite what it used to be—no longer making the strange familiar but making the familiar strange again. It seems important to find ways of reminding ourselves that most “familiarity” is meditated and delusive.

China’s increasing control over American dollars

From James Fallows’ “The $1.4 Trillion Question” (The Atlantic: January/February 2008):

Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China. Like so many imbalances in economics, this one can’t go on indefinitely, and therefore won’t. But the way it ends—suddenly versus gradually, for predictable reasons versus during a panic—will make an enormous difference to the U.S. and Chinese economies over the next few years, to say nothing of bystanders in Europe and elsewhere.

When the dollar is strong, the following (good) things happen: the price of food, fuel, imports, manufactured goods, and just about everything else (vacations in Europe!) goes down. The value of the stock market, real estate, and just about all other American assets goes up. Interest rates go down—for mortgage loans, credit-card debt, and commercial borrowing. Tax rates can be lower, since foreign lenders hold down the cost of financing the national debt. The only problem is that American-made goods become more expensive for foreigners, so the country’s exports are hurt.

When the dollar is weak, the following (bad) things happen: the price of food, fuel, imports, and so on (no more vacations in Europe) goes up. The value of the stock market, real estate, and just about all other American assets goes down. Interest rates are higher. Tax rates can be higher, to cover the increased cost of financing the national debt. The only benefit is that American-made goods become cheaper for foreigners, which helps create new jobs and can raise the value of export-oriented American firms (winemakers in California, producers of medical devices in New England).

Americans sometimes debate (though not often) whether in principle it is good to rely so heavily on money controlled by a foreign government. The debate has never been more relevant, because America has never before been so deeply in debt to one country. Meanwhile, the Chinese are having a debate of their own—about whether the deal makes sense for them. Certainly China’s officials are aware that their stock purchases prop up 401(k) values, their money-market holdings keep down American interest rates, and their bond purchases do the same thing—plus allow our government to spend money without raising taxes.