A perpetual boom bust cycle? Sounds healthy.

Counterintuitively that’s the definition of healthy in economics.

If you don’t have busts, at some point your system will abruptly/violently cease to exist.

This is exactly how real world economy is (ideally) meant to work.

It is a negative feedback loop, so yes, it makes systems stable.

Regression to the mean. The alternative is no adjustment at all.