This is true in a theoretical free market where there is price discovery. In the "markets" that actually exist, though, we don't have true price discovery. We have a market with centrally controlled interest rates, central bank purchasing (in a variety of ways) and other institution-based interference that create inefficiencies that are not organic, and are therefore not self-correcting.
I don't think that changes the previous statement. It just changes the value of truth. Maybe not self correcting, but certainly self regulating towards the new normal as set out by regulatory constraints.
None of the stuff you mentioned invalidates any of the mechanisms I described, although regulations may decrease their effectiveness (as with any other price-discovery mechanism) by introducing friction or breaking efficient instruments.
