Say the government tries to control the price of a certain commodity, say oil. The price is capped,
So that instantly all the suppliers stop supplying, and sell on the black market.
people have more disposable income,
No, because time and money is wasted getting the oil that is in short supply. Long lines, violence. It all happened when Nixon put price controls on oil.
and the boom is on.
Quite the reverse.
Of course, any economist would tell you that this is going to end when the supply of oil runs low.
Which is, as above, right away.
Then you get the bust of people spending less because they now realize that they actually have less disposable income.
They knew this all along.
Sounds a lot like the general concept explaining ABCT to me.
There is a bit of a difference. You write “the bust of people spending less”. That sounds like you are using standard keynesian theory, that a bust is by definition people spending less because of animal spirits [Keynes], or because inflation isn’t high enough [Bernanke]****.
ABCT says a bust is caused by printing money, which causes people to invest in foolish things**, and when it is discovered nobody wants to/can afford to pay for those things, the industry involved collapses, which is the bust. Workers fired, factories closed down, etc. [That was the internet explanation of ABCT. Deep stuff. Read more, my son.]**
So then, couldn’t this explain also why artificially lowering the price of homes with subsidized loans and special programs would lead to a glut of homes?
Loans and programs don’t lower the price of a home. They raise it. They lower the difficulty of getting a loan [but not the difficulty of paying it back].
Also, one has to ask, “Where did the lenders get all that money to lend to so many people?” That’s where the printing money part [= inflation] comes in.
When people realize that their homes aren’t selling because there are so many and they are priced so high, then they actually have less money than they thought (in terms of equity),
Very true.
and so people decide to spend less.
See above about why “spending less” is not the same as a bust, but a Keynsian superstition. After all, if you have less money than you thought you did, of course sound common sense is to spend less. And so every individual benefits from spending less. So of course spending more harms him. And if spending harms masses of individuals, how can it be good for the economy as a whole? “The Economy” is not a thing. It is just an abstraction. What counts is the individual people.
So without a general inflation, couldn’t this boom and bust cycle occur via interventions in specific markets?
No, because where did the money come from to spend in the first place? By inflation [=money printing].
Now of course, people do stupid things all the time. But to have so many people get so stupid, and have the money to waste on their foolishness, so many people and so much money that it affects the economy as a whole, that requires inflation [=money printing], as ABCT explains.