I had lunch with a businessman the other day who is the CEO of a medium-sized manufacturing company. Our conversation inevitably came around to the state of the economy and the markets.

About half way through the salad he set his fork down and said, “You know, I’ve been investing since back when LBJ was in office. I’ve seen a lot of things go up and down and come and go. And I even studied the history of all this stuff back in college. And you know what one of my favorite investments of all time was? One of my best stores of value? Some farmland that I bought years ago,” he chuckled.

The gentleman was quiet for a moment as he took another forkful of salad. I waited. “My CFO heads the investment committee of our company's DB (pension) plan. He reports to me. He came in to my office a couple of months ago and was pretty shaken up. We use the top consultants; big firm, Harvard MBA s, the whole deal. They come in with all their charts and graphs, and reports and tried to explain why Modern Portfolio Theory just went out the window last year. Diversification took a vacation. Everything our plan owned rolled over and went down like a squadron of Blue Angels! Large cap, small, mid, international stocks all down. Hard! Our fixed income was under-weight Treasuries as these managers reached for yield and they had their asses handed to them. Triple-A turned into B or worse. Currency swings obliterated our already beat-up international fixed income. The plan’s cash was overweight in ARS’s that locked up. Our hedge fund managers turned out to be nothing more than high-beta stock ETF's."

It was about then when the waiter came by and served our meals. I was at a loss as to what to say. I was trying to tally the implications of the hit their pension plan took when he spoke again.

“But you know, that’s not the worst of it. Everything has a cycle. I’d like to think that the storm has passed and we can dig our way out of this, but…” his voice trailed off. “But everything the government and the Fed are doing is wrong. It’s backwards! This mess is going to get stretched out for years. Debt got us into this mess and they’re printing more of it. Consumers are over-leveraged and they want them to spend more. Their retirement savings have been gut-shot. And the last thing they want is for consumers to start saving! They’re punished with low interest rates that discourage saving.

“We need to make jobs in this country, not bail out these banks. We need to produce something! We’re giving trillions of dollars to bankrupt banks and bailing out the people who got us in this mess in the first place. Now we’re relying on these same people to fix it and the same regulators who let it happen! This is like something out of a Kafka novel!

“These banks and Wall Street firms and hedge funds and their quant models created a bunch of money out of thin air that inflated asset prices and backed it with worthless debt. It has to get washed out of the system. Instead they’re repackaging it, perpetuating it, and keeping it in the system like pass the old maid. And with this PPIP plan, the Fed and the Treasury and the banks have engineered a scheme to off-load this on to taxpayers!” he exclaimed looking at me like he was gauging if I understood the gravity of this foolishness.

Then he went on. “I don t need Citigroup or Bank of America, or Goldman Sachs,” he said indignantly. “Let them eat what they cooked. I don t know about you, but our regional bank is just fine for us. The whole thing is just sad.”

Again, I was at a loss for words. We both ate quietly for a time but I could see his mind was working overtime at the outrage he felt. Before he finished his meal he began again.

“My ass is tired. I’m tired of seeing how the government is responding to this crisis. I’m tired of seeing what this economy is doing to my company, I’m tired of all the government reporting and regulations and red tape. I’m tired of losing money. I’m tired of getting indigestion of seeing the market fluctuating way down, back up, back down. I’m tired of having my wealth that I’ve worked all my life for exposed to the whims of this screwy stock and bond market. At the end of the day, it’s just paper, you know. And they keep printing it. They put out more stock, and they issue more bonds. There is some point where a rational person has to take a step back and question exactly what it is they’re investing their money in! What return are they expecting from a company burdened with tons of debt and diluted stock while trying to conduct business in an economy like this?

“You see, good investing can be deceptively simple,” he said quietly. “You look for something that everyone needs and there’s only a very finite supply of it.”

“Like gold?” I asked.

He shrugged, “Gold s fine, but it is volatile and doesn’t pay any income. It doesn’t produce anything.”

“Like your farmland?” I asked.

His features softened and his whole frame relaxed at the change of subject. He looked off at some point in the distance behind me. “Yeah, like my farmland. You know, it s the one thing that didn’t blow up on me last year. That’s because it s real. It produces something. Every year I get checks for those crops from the tenants who are farming those properties. The land appreciation has pretty much paced inflation. They’re not making any more of it, as they say. In fact, there’s less and less farmable land every year. Meanwhile, the demand for food is going up in all these emerging economies and the weather is getting crazier all over the globe. Countries have to keep their people fed. I like the odds on this kind of investment.”

Of course he was preaching to the choir, but I kept my mouth shut. He was on a roll.

“And I don t get an ulcer watching the price fluctuate up and down on CNBC. It’s definitely the lowest stress investment I’ve ever owned. No question about it. It’s never going to disappear like Lehman Brothers and Merrill, or go to 97 cents like Citi. I m still gagging on GE and General Motors is toast. Don’t tell me about blue chip, widows and orphans investments! Some of the farm properties are in trusts for my kids. I sure hope they never sell them after I’m gone,” he added wistfully.

Then his attention was back and his face clouded, “I’m very concerned about the things that the government is doing and the promises they are making. It’s not good for business and it s not good for our economy. We’re not going in a good direction. The math doesn’t work. They re writing checks they can’t cash. The numbers are getting so big our GDP can t support paying for it all from taxes - and it s not politically feasible, either,” he added. “They have to print it, have to print it. There’s a black star hurtling in our direction with inflation written all over it. Like I said, gold s fine but it doesn’t pay any income. And it’s volatile. I’m getting too old to keep rolling the dice. I want something where I’m going to get paid while I wait, and I’ll win no matter which way this economy goes.”

“Farmland?” I asked after a pause.

He nodded. “I want more farmland.”