An economic asset is valued based on expected future cash flow. In the last decades however, real estate and some stocks are mainly valued based on expected appreciation. Real estate even generates negative cash flow for most home owners, and some investors.

Per se, it is speculation (in higher prices) rather than investing (in future cash flow).

> If the best returns is on beans and rice, people will starve.

Farmland and equipment are assets, but they are valued based on cash flow from selling produce. Produce is perishable and can only be sold as food, so it will be sold at a market prices regardless of speculation in farmland.

> all of the wealthy will liquidate their stockpiles of stocks(crashing the stock market in the process)

Not "all of the wealthy". Relatively little is required at the margin to crash the stock market, and the majority of "wealth" would follow the market down. Only a tiny proportion would be able to exit at the right moment.

Asset depreciation is an adjustment of the relative value of labour vs. assets.

A possible delineation between "water" and "oil" is whether the thing can be legally used as collateral for loans and how the value is booked. But idk.