This is a fine rule to aim for (prudent for individuals and all that), but it makes me wonder. If everyone in the world (and the nations of the world) actually began to live by this advice, wouldn't that trigger an immense depression? (When responding, please take me at my word: I'm not consciously posting flame-bait; I'm just truly ignorant when it comes to economics.)

Where I come from (India), a decade ago, you could find people who had waited all there lives to use there savings to buying a new home. There was no concept of 30year mortgages - forget about credit cards. When credit cards were first introduced, they were used for the convenience of not having to carry cash not really for credit (at least from the customers point of view). But things are changing now - its becoming the same as in the US.

In the long-run, a bigger capital base can create more technology and/or capital investment, which improves productivity, which improves standards of living.

However, I don't want somebody else to own equity in my house, rather me having a normal mortgage.

At the very least, such a change would cause all kinds of liquidity problems, and would certainly cause the significant negative effects you predict.

Edit: I'm doing my part in aiding the collapse of civilization by not carrying any debt. (Except for my house - but I wish I didn't even have that one hanging over my head.)

So if you don't have $200k on hand, you shouldn't buy a house?

(or is the rule "don't buy things Apreche doesn't approve of you buying"?)

While true, in the way you use it, it's a gross oversimplification. e.g., I can afford my house but there is no way I could pay cash for it and I'm simply not going to save for 20 years to do so.

In short: just because you need credit to buy something doesn't mean you can't afford it. On a site purportedly aimed at entrepreneurs, it's disheartening to see how many people really don't understand the usefulness of properly managed debt.