I've seen cases where it allows those with money to extract money from those with a lot of money too.
Take this situation:
Business A and business B are both doing well and competing with each other in a duopoly.
a) No credit: Each business needs to be in the black, and competition is sustainable.
b) Credit: Whichever business borrows more money to spend on buying customers is more competitive in the short term (which can lead to monopoly long-term). Both businesses run in the red are and brittle. In any downturn, tightening of credit, etc. both are liable to go under.
This competition to raise increasing amount of money to be competitive (to increasing devaluation and/or debt makes for a pretty broken economy), and makes traditional businesses (which invest in R&D from profits) increasingly unsustainable.
This even goes to government level. Historically, if e.g. two European powers were in a war, whomever could borrow more to buy weapons / hire mercenaries would have an advantage. Access to credit made for more costly, more deadly wars, and broken national economies. If neither side had access to credit, both sides would be strictly better off.
There are parts of the US where home ownership is bottlenecked by land prices, where this is absolutely the case.
And there are parts where it's bottlenecked by construction costs, where this is not the case.
"Are a bad thing" is also complex. I would agree they WERE a bad thing when introduced.
Today, there is a complex problem of how you unwind this phenomenon. If you invested your life savings plus $800k of debt into a $1M home, and it's worth $500k, you have a serious problem. Simply eliminating access to debt would cause all sorts of economic disruption for consumers, almost certainly outweighing the benefits in lower housing costs.
And the other piece of the puzzle are zoning and codes. 100 years ago, if you had a plot of land, you could cut the wood and build a log cabin. Today, construction is $$$$$$$ because of inspections, licenses, insurance, and a crew of bonded / licensed workers. A log cabin would be illegal and result in fines.
I've seen cases where it allows those with money to extract money from those with a lot of money too.
Take this situation:
Business A and business B are both doing well and competing with each other in a duopoly.
a) No credit: Each business needs to be in the black, and competition is sustainable.
b) Credit: Whichever business borrows more money to spend on buying customers is more competitive in the short term (which can lead to monopoly long-term). Both businesses run in the red are and brittle. In any downturn, tightening of credit, etc. both are liable to go under.
This competition to raise increasing amount of money to be competitive (to increasing devaluation and/or debt makes for a pretty broken economy), and makes traditional businesses (which invest in R&D from profits) increasingly unsustainable.
This even goes to government level. Historically, if e.g. two European powers were in a war, whomever could borrow more to buy weapons / hire mercenaries would have an advantage. Access to credit made for more costly, more deadly wars, and broken national economies. If neither side had access to credit, both sides would be strictly better off.