Holding land isn't as straightforward as you describe it. Every parcel of land is different. It takes a lot of knowledge of many kinds to be the one who makes money from real estate, instead of losing outright for overpaying, underselling, or simply being whittled down by taxes and other expense. And its lack of liquidity creates high situation risk, for anyone who doesn't have a large enough csh buffer to weather life's turns, unscathed by any immediate needs.

But yes, sophisticated investors do make money on under utilized land. Parasitically.

And it is an economy damper. Under utilized land is poor economic optimization by definition. Not to mention the undertow it creates, in terms of unproductive scarcity, for people who actually need to utilize land - whether that is for homes or businesses.

The solution, as economist Henry George pointed out, is to tax land, but not the property on it. Tax the exlcusionalry holding of a limited resource, don't tax productive value created by people.

Taxing land and not property isn't as simple as taxing both, but it isn't rocket science either. There are lots of standards and practices, because distinguishing between the two is important for many reasons.

The irony of taxing property, the stuff that makes land productive, is that it is a wealth tax that hurts rich and poor alike. A poor person, unemployed, who spends their time bereft of reliable income improving their own home will now be taxed on the value added - every year for the rest of their lives or until they sell or lose their home. That is a very perverse situation.

So yes, the taxation situation that subsidizes under utilized property, which is also parasitically rewarded by gains in value far exceeding the lower taxes they pay (for having no development to tax), is continually damaging the economy.

I didn't describe anything as straightforward, the fact remains that there are limited goods/properties/commodities that are in demand, not just money. It's not up to me to show why it's exactly like money because that was the only property of money used to describe this detrimental problem, it's up to the person who says that is a problem with deflationary money. Money can also be taxed too, so that also is insufficient to make the case for why it is different than land. Or alternatively you could take a limited non-renewable commodity (say, copper) that is in demand but not taxed. Also you have still not addressed that increasing value of money naturally reduces the required amount of it necessary for making a particular trade. A fairly striking omission when claiming there are feedback spirals in such a system.