That's how Capitalism works. Capital drives growth. When credit market expands you have growth. Then it reaches an upper bound and theres reversion, and credit market contracts.
The key is to keep inflation constant so the the credit contractions don't push us into recessions, then deflationary spiral. Nothing new here, everybody knows this
The point is simply that credits that stand for capital, are good. Credits that stand for consumption, are a burden on the future.
Nobody is saying that credit that is backed up by capital is bad, on the contrary. As you say, that's the source of growth. but a mountain of debt, not backed by capital, is a recipe for disaster.
Normally, the interest rate on credit is the lower bound of ROI of capital. Indeed, no person in his right mind is going to take a credit to invest in capital on which the expected ROI is lower than the interest on the credit. As such, the interest rate for credit is approximately the ROI on capital, which is then by itself the economic growth. The funny thing is that by setting artificially the interest rate to near-zero, you are inviting people to invest in capital with an ROI of near-zero. You shouldn't be surprised then to get an economic growth of near-zero !
Being generous on the credit market has the perverse effect of allowing people to invest in low-ROI capital. That low-ROI capital will then, well, generate low ROI, which will imply a low growth. As a reaction to that, Keynesians will lower even more interest rate !
To invite people even more to do bad investments...
You don't know if investments are good or bad until hindsight. Whether people borrow money to start business or buy houses and cars. It doesn't matter. What matters is aggregate demand drives production and jobs.
The problem w deflation is you don't have that driver. Falling prices don't make people consume more. The rate of consumption is based on their income and confidence on future earnings