The answer to the above question, to a very large extent, depends on how and when credit is being used. For instance, if we take into consideration the negative effects of credit card usage (which exceeds the positive effects), we can firmly argue that credit is leading to the downfall of our society.
Most at times, credit cards push people into spending as much as they can and sometimes even more than they can afford. Majority of credit card users will confirm that they only buy some things simply because they were having the credit card on them to buy them, and end up spending the bulk of their income on impulse items.
And this ultimately leads people into debt as their expenses starts exceeding their income. Then, you can imagine what happens next. As more and more individuals become indebted, they become dependent on the Government. And the end result is that the Government becomes saddled with more and more people to spend its scarce resources own.
Another issue which will also add up to the argument that credit is leading to the downfall of our society is the erosion of currency value. A typical example of this scenario is the current recession we are experiencing. If you take a close and honest look at the recession you’ll realize that it was partly caused by excessive borrowing by consumers (in addition to the other causative factors), which also doesn’t augur well for any economy.
You’ll note that the Government’s immediate reaction to the recession was to make more money available to both consumers and the lending public. And this is a strategy with it own merits and demerits.
One significant effects of stimulus packages is that they make more money available to consumers and the lending public all right, but not without bringing up some negative effects on the national currency. As more and more money is made available to the public, some value of the currency is sacrificed, leading to a drop in its value.
These problems which make credit a possible recession agent exist, but they can be controlled if the Central Government and the public in general public put in place the requisite measures to control this dangerous phenomenon.
Individuals can start being more creative in spending money and avoid impulse spending. They can also learn and put into practice the requisite money management skills to prevent credit card debts and indebtedness in general.
The Government can also add up to individuals’ effort by improving its fiscal policies and ensuring that individuals manage their own finances instead of looking to the Government to fix them when they are broke.
To conclude, I will say that “credit” can and is leading to the downfall of our society, but we can control it if we want to. And since, making away with credit entirely from our society and corporate dealings will also not be a good idea, I recommend that we all strive to make credit useful in our society.