Marc Faber on Liquidity

There is an excellent interview with Marc Faber on Bloomberg. He takes issue with the concept of using interest rates as a measure of liquidity, and correctly points out that the public is too concerned with interest rates as a measure of liquidity and not concerned enough with credit growth.

The first nine minutes of the interview are the best. Gold-jihadists will enjoy the following segment as Faber highlights it as a great investment in virtually any scenario. The rest of the interview focuses on commodities and which Asian economies offer the best investment environment.

Personally, I can’t get excited about commodities. History shows they are deflationary in the long run, and the only way to make money trading them is to predict short term shortages, something I don’t know how to do.

His neatest and most unique suggestion is to buy agricultural farmland, which can produce inflation adjusted goods at any point in the future. Faber highlights this as the most un-correlated asset one can own.  I suppose timber would fall into this category as well. The only commodity Nyquist investments are in Uranium and Timber production.

His pick for best investment? Asian currency. He highlights the Yen carry trade and the relative cost of his hotel in Manhattan vs. Europe and Asia. I agree with him. The fundamentals supporting this outlook existed a year ago, and are even more emphasized today. Unfortunately, if you pursued a short-Euro long-Yen strategy, you didn’t do very well.