Harmful yes, above the legal limits of dangerous chemicals allowed, no. I'd certainly take your friends advice. The smell you get from new carpets isn't occuring for no reason, it is through the chemical processes carpets have to go through before they can be sold. As far as i'm aware carpets must be to a certain degree fire resistent, it is at this point chemicles are added, likewise when the colour is dye into it. I think it is better to avoid it if you can, however if you don't have small children that will play down in the basement and if you're not using much anyway (like sitting there for long periods), then go ahead.
Hope that helps.
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"The only way to discover the limits of the possible is to go beyond them into the impossible." - Arthur C. Clarke
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