Tax regimes currently fail to capture enough land rent. Land prices, reflecting the excessive private capitalisation of publicly-generated rent, form dangerous bubbles.
Ignoring prudential risk management, banks continue to provide credit into the bubble for the purchase of grossly overpriced real estate.
This bubble in land prices eventually bursts and prices tank towards the long term mean.
People cut their spending in an attempt to deal with their over-commitment to mortgages. This adversely affects businesses and the broader economy.
Businesses go broke and people lose their jobs.
By reversing the process, capturing rent and abolishing taxes (as recommended by the Henry Tax Review) the depression may be remedied.
However, this is not done and the economic depression lingers.