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🛒 Grocery prices apocalypse

May 04, 2021 Sign up
TOGETHER WITH Finny

Happy Tuesday! Bitcoin is the fastest asset to reach a $1 trillion market cap. Can you guess how long it took for Bitcoin to get there? See the answer in the trending section.

Here are the money topics we'll cover today:

  • The grocery prices apocalypse
  • What Bitcoin has taught us over the last few years
  • Places that will pay you $10K to move there

ECONOMY

Grocery Prices Apocalypse

Your grocery bill has been creeping up for some time now, and as always, there are some economic influences pulling strings behind the scenes causing this to happen. The Bloomberg Agriculture Spot Index, an index that tracks the cost of essential farming staples, has been on a surge lately and is at its highest point since 2014.

The cost of soybeans is reaching levels not seen since 2012 and corn, which also hit an ATH of about $8 in 2012, remains on a V-shaped route back up. Wheat is seeing much of the same, sitting at prices not seen in roughly 8-9 years.

What’s causing this?

The cost of corn, wheat, soybeans, and other necessities has been rising due to various macroeconomic factors that have ripple effects on the overall pricing of these essential goods and the products derived from them. Here are just a few reasons why. 

  • Tightening global supplies: A lack of supply in several major commodities markets like corn, wheat, soybeans, and other essentials continues to be a driving factor in rising prices. The reasons for this are...multifaceted and extensive, and probably best elaborated on by your local farmer. 
  • Higher demand: China is one of the United State’s biggest customers when it comes to agricultural exports, and they continue to import tons of corn from us as they recover from the pandemic and seek to restock, keeping the demand high. As you learned in elementary school, lower supply and higher demand mean higher prices. 
  • A weaker US dollar: A weaker US dollar doesn’t just mean that our money buys less. It also means that other countries can buy more relative to their currency conversion rates when importing goods from the US. This negatively affects our purchasing power, driving up prices. A weak dollar also has an inverse relationship with commodity prices, because as mentioned above, it increases demand.

How to deal with this

So how do we deal with an increase in food prices that’s already here and could be sustained for the remainder of the year? Here are a few tips. 

  • Avoid name brand products if it’s out of the budget. Is the quality difference between Dave's Killer Bread and the local store brand so different that it warrants the 30% higher cost. Before you blindly grab up your usual grocery goods, see what other options there are and ask yourself what you're losing by buying the cheaper brand.
  • Find a local farmer’s market and give it a try. Some farmer’s markets are actually more expensive than the supermarket. Don’t go there. Get recommendations from your friends and online. Or, just find your nearest mountain range or middle-of-nowhere corner in a smaller town—that’s where you’ll locate a more subtle, reasonably priced farmer’s market.
  • Create a little savings account just for groceries. Start setting aside a bit of extra money, whatever you can afford, every week for the grocery budget. This is above and beyond whatever you normally allocate, created as an exception knowing the current pricing predicament.

CRYPTOCURRENCY INVESTING

What Bitcoin has taught us over the last few years

Viktor Forgacs, Unsplash

Bitcoin is kind of like that neighbor that moved in a year ago, but you never really got to know them or how cool they were until last week. Just think about all the gossip you’ve missed out on. Bitcoin on the other hand, has been around since 2009, but it seems like we’ve only just gotten acquainted with the crypto king.

Bitcoin made its grand entry to the world in 2017 as it began to gain mainstream media’s attention. Running all the way from $2,000 in May 2017, to almost $20,000 last December, we saw it 10x right before our eyes, and then... everyone forgot about it again for 3 years.

Despite this though, Bitcoin stuck around, and all the believers in decentralized finance, whales and small-time hodlers alike, seem to have been proven right for now. For the foreseeable future, it appears Bitcoin is here to stay, and it’s taught us some important things along the way.

Volatility is a part of the adoption

Bitcoin’s journey has been anything but a linear one, with the name becoming almost synonymous with volatility over the course of its life. V-shaped crashes and returns of over 20% or more on any given day have become the norm in crypto-land and a phenomenon that long-term investors are not phased by because they understand patience. 

When you introduce an entirely new asset class to the world, something shrouded in skepticism and instability, volatility is just part of the process. Bitcoin doesn’t have a near objective, longstanding, agreed-upon value like the dollar or other traditional assets. FUD and any inkling of bad news are enough to spook off speculative investors, and that it does.

Bitcoin is also like an extremely low float asset in comparison to most other stocks. While there is over 18 million bitcoin in existence, some estimate that the free float of this is actually only around 2-3 million, making whale liquidations result in even bigger splashes.

Patience is required

Accepting its volatility is therefore a part of the acceptance process, and patience is a virtue when it comes to awaiting its stabilization. No one knows when Bitcoin will outgrow its overly dramatic price movements, but it’s likely to be after the Bitcoin that’s been stuck in cold storage for years gets liquidated, large wallets sell, and the price rises accordingly as more and more retail investors join.

A crypto monopoly of sorts

Bitcoin obviously has the highest market cap of all cryptocurrencies on the market. Sitting at about a $1 trillion market cap, the only other crypto that comes close is Ethereum, which has a market cap north of $350 billion.

Therefore, Bitcoin essentially is the crypto market, and although other competitors can provide some valuable and useful alternative projects in the future as this area of technology progresses, it appears that Bitcoin is currently king, and the one crypto with strong institutional following.

Bitcoin and DeFi are probably here to stay

Bitcoin doesn’t just exist for the sake of itself, or because its anonymous creator wanted to create a new commodity with a trillion-dollar market cap for fun. The entire thesis behind Bitcoin was to begin work on the idea of decentralized finance, and it has accomplished just that.

The uses for blockchain technology and decentralized financial assets and currencies have shown their value to the world in more ways than just exponential gains in the crypto market, and this perspective on money and personal finance is something that’s left an impression on the world for good.

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LIFESTYLE

Places that will pay you to move there

Times are tough for some places in rural America. Luckily, sparsely populated states and towns have come up with a solution to their growth problems: they’ll just pay for some company. It’s kind of like when you visit your grandparents and they give you $100 just for existing. Awesome, right? 

So, if you’ve always dreamed of being the next Marty Byrd and moving to the Ozarks to launder money for the cartel, good news, Arkansas will actually pay you $10,000 in cash to move there! But you didn’t hear that from us.

Here are some other places that will pay you to move there

  • Alaska pays its residents from its Permanent Fund Dividend every year, just for living there. The catch is you must have lived there for over a year. Most years the PFD pays residents a dividend of around $1,000, but this year it could be as much as $5,000.
  • Tulsa, Oklahoma. Apparently, since 2018, the Tulsa Remote program has been offering remote workers $10,000 grants just to move there. The criteria include being a full-time remote employee or self-employed outside of Oklahoma, over 18 years of age, eligible to work in the US, and can relocate within 2021. Actually, I might have to look into that. 
  • The Shoals, Alabama. This area in northern Alabama is yet another area offering $10,000 just to relocate there. With one of the cheapest average home prices in the country at $138,000, that $10K automatically gets you a third of the downpayment!

Other noteworthy, runner-up candidates: Vermont; Topeka, Kansas; Newton, Iowa; Lincoln, Kansas.

✨ TRENDING ON FINNY AND BEYOND

  • ANSWER: It took Bitcoin 12 years to hit a $1T market cap. For context, it took Google 21 years and Apple 42 years to reach $1T (Visual Capitalist)
  • How much revenue tech giants like Amazon and Apple make per minute (CNBC)
  • Here’s when you can sign up to get $50 a month from the FCC to help pay for your internet (Yahoo!)
  • Finny lesson of the day. With the tax deadline approaching, do you know if you are eligible for a triple tax benefit by way of a Health Savings Account (HSA)? Take this quick lesson to learn all about it:

Finny is a personal finance education start-up offering free, game-based personalized financial education, a supportive discussion forum, and simple stock and fund tools (aka Finnyvest).  Our mission is to make learning about all things money fun and easy! 

The Gist is Finny's newsletter to our community members who are looking to make and save more money, protect their finances and be their own bosses!  It's sent twice a week (Tues/Thurs). The editorial team for this issue: Austin Payne and Chihee Kim.

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