The credit system, without going too much in depth, is not retarded. Certainly there are problems with certain aspects of the modern financial system, of which credit is a part, but credit/interest are not some sort of inherently fucked up/evil thing. They can be a boon to both borrower and lender.
The biggest problem for credit is the manipulation of interest rates via central bank policy. Rates should occur based on actual supply and demand, rather than the central bank attempting to "spur demand" by dropping rates. This contributes to debt bubbles and everything else that goes along with them.
It is a non-starter of an argument, in my mind, to claim that credit is bad because some people might abuse it/be unable to handle it. Fuckin water needs to be handled properly or you might drink yourself to death.
As far as the pointlessness of credit for those who don't need it to "live beyond their means", this is incorrect. It's been sufficiently long enough since I read on the topic, so I don't remember the specific terminology, but how much money you have or can expect to have in the future essentially controls your (at least short term) purchasing power. If I have x$ amount and there is something I need anyway which happens to be on sale in bulk, but it uses the total of x$ amount, leaving me broke until a future date, I must pass on that deal and buy in the more expensive per unit amount but immediately cheaper quantity. Our income is pretty much never constant. We have pay days, which may be of varying length apart. We already have to "stretch" dollars to make them cover the distance (to "smooth" our financials), and in doing so reduce the absolute purchasing power. Credit allows for us to smooth our production/consumption and savings pattern above and beyond what our mere income allows us to do.
Of course it also provides an incentive to save for the purpose of lending for a possible return.
