I'd thought about elaborating to head off this comment.
This is true when credit first arrives on the scene. People looking for loans are thinking in terms of paying the money back, and the benefit they'll have from temporary use of the money. Over time, this extra money drives prices up (especially with collateralized loans), and causes credit to be increasingly necessary to even afford the items in question. People then think in terms of economic rent, with little intention of paying back the principle. (See: US housing market).
It's still true that in every instance, one ultimately chooses to borrow the money. It's just that it becomes impossible to lead a 'normal life' without doing so.
As the Guardian article linked in the Mises article points out:
Grameen's tactics suffer from five fatal assumptions.
First is the idea that poor should be self-employed rather than work for wages. That is contrary to the whole history of successful economic development.
Second is the idea that loans are the main financial service needed by the poor, whereas they really need savings and insurance.
Third is the idea that credit is what builds enterprise, whereas the truth is that entrepreneurship and management are more important.
Fourth is the idea that the non-poor don't need credit, whereas the truth is revealed in market-based banking: higher incomes can handle higher debt.
Fifth is the idea that microcredit institutions can become self-sustaining, whereas all experience shows that new enterprises in poor areas that are built on credit alone rarely emerge from dependency.
Sure, everyone "ultimately chooses" to borrow the money, just as in the most egregious loansharking operation, and they end up living under threats of broken legs after being sucked in. Only now, 1.2 billion people will be trackable forever by Big Legbreaker.
I am serious about Grameen being one of the prime movers here.
From their site:
By 2013, with the help of our commercial partners and philanthropists that support our work, we envision that, 100 million poor people in India will have access to a full range of financial services and technologies that will progress them out of poverty.
India is home to one-third of the world’s poor, who make up 42 percent of the more than 1 billion Indian people.
Out of India's population, 76 percent — 800 million people — live below the poverty line of $2.50 a day.
About 87 percent of poor rural farmers still do not have access to formal credit. Although Indian MFIs reach an impressive 15 million borrowers, total demand estimates are more than 90 million poor.
In line with its commitment to help alleviate poverty, Grameen Foundation established Grameen Foundation India (GFI) in 2010 as a wholly owned subsidiary.
