I'm reading Ray Dalio's How the Economic Machine Works, and although I understand the role of credit in an economy, I don't understand whether credit actually adds any value to an economy.
Ray says that credit is what causes economic cycles (i.e. people borrow and invest when interest rates are low, and save when interest rates are high). This behavior leads to short term debt cycles in the economy.
However, Ray also says that these short-term cycles are centered around a long term productivity growth of around 2%.
So my question is as follows: If productivity will always grow at around 2%, what is the point of credit? Aren't you simply borrowing from the future, and then subsequently paying off those debts? Would economic growth be the same without credit? Would the economy be as efficient?
Edit: Here's the paragraph that I'm confused about. Is this paragraph saying that credit doesn't add anything to an economy (since long-term productivity growth is the same regardless?)