The limits imposed by the Constitution. It's really not that mysterious of a document. The interstate commerce clause might seem ambiguous, but it certainly was never intended to be as abused as it is today. The existence 10th Amendment makes this even more obvious.
> 2. Just how was overregulation responsible for a massive price bubble?
I'll be a bit more clear: we either need much less regulation, or a whole lot more. Given how badly more regulation generally goes, I'd prefer less. We were stuck in this awkward middle ground as a result of the Gramm-Leach-Bliley act. It didn't get rid of the FDIC, but it got rid of certain regulations preventing commercial banks from being investment banks (simplification). So it basically encouraged risk taking by banks. Remove the FDIC, and you'll see much less risk taking. So we really need to get rid of ALL of the Glass-Steagal act. As well, we need to get rid of the SEC. By this sort of deregulating, you discourage risk by making banks much more accountable to their investors.
> 3. What part about your definition of capitalism excludes massive price bubbles, followed up by the government of the time constraining monetary conditions?
My definition of capitalism, ideally, would not include the Fed.
> They would be a bit more expensive but not that much more expensive.
But would the lower/middle classes be able to afford them? Or as readily? Given wages here, probably not.