Can anyone explain US government subsides for foreign tobacco farmers?

Question

I am trying to help my daughter in her Econ class and I cannot find anything that explains, in a way that I can understand it, how US subsidies to foreign tobacco farmers work ... how much is offered ... on what terms ... what are the long tern and short term benefits to the US. I have read a lot tonight but I can't seem to grasp why we do this!

Answer 1

Well, I didn't know that we did subsidies to foreign tobacco farmers, but here's the gist of how it should work:

We give subsidies (money) to farmers to keep them alive and keep tobacco prices close to market value (maybe lower, maybe higher). In return, they promise not to grow but a certain amount of tobacco (or whatever crop). So they either don't grow it or destroy a lot of it later.
The principle is to keep a lot of tobacco off the market so that the tobacco values remain high or stable. If too much tobacco floods the market, price drop tremendously and that could hurt US tobacco farmers.
If we keep too much off the market, though, values go up and we'd have to pay them more. Or, if prices go up, the foreign farmers might not take the subsidies and start growing their own more which would eventually cause a sharp drop in tobacco prices as stated above.
The trick is to put out enough subsidies to keep the market value of tobacco high and stable, to protect U.S. farmers, but not enough to move tobacco prices too high.

Answer 2

No, it quite is not an analogous. promoting bonds to a remote places government is a debt device. It potential we are able to pay them interest on the bond on an analogous time as that's recommendations-blowing and purchase it returned from them (at a sequence value) as quickly as we are waiting. there is no introduction of international money in the technique, it quite is in basic terms one u . s . a . borrowing from yet another. Printing money in one u . s . a . does not create wealth. If it did, each physique might do it. The greenback has a sequence value on the international industry (presently approximately .sixty 5 of it quite is unique value). If we in basic terms print greater money, then the money this is all waiting in circulate will become properly worth much less. So, it quite is value is going down. On a international degree, this means that each and each physique of our expenses pass up and that's what motives inflation.