At first glance, the question “why do we pay taxes?” seems straightforward. Mainstream economic textbooks offer a clear answer: governments collect taxes to (1) correct market failures, (2) promote equity, and (3) stabilize the economy [1].
But that explanation is what governments claim to do, not necessarily what they achieve. In practice, governments often fail to meet these lofty objectives. In fact, government failures are frequently larger and more damaging than market failures they are meant to solve.
Recently, I’ve been questioning a lot about the decisions I’ve made in life. Without a doubt, some things I’ve written online have had an impact—temporary or permanent—on my (future) career and life overall. My genuine search for answers to fundamental puzzles in money, banking, and interest rates has led some to label my economic views as “heterodox,” a term I only heard from a friend two weeks ago on a train from Semarang to Jakarta. At this point, I still can’t be certain that my current answers to these puzzles—reflected in everything I’ve said or written—are correct. My views are constantly evolving as I meet new people, read new books, and crunch new data. This is probably the hardest part of learning social sciences.
Mainstream economics distracts the general public from knowing the real driver of the economy: the creation of money through credit.
Money is created from nothing by banks when they make loans, and by central banks when they buy assets like government bonds. These actions create new purchasing power.
Interest rates are a smokescreen. The true stance of monetary policy is the growth rate of money, not the policy rate set by the central bank.
Track the cause, not the effect. Instead of traditional measures like M2 (bank deposits), we should measure the actions that create money. The proposed measure is: (1) bank credit to the private sector (loans to people and companies), plus (2) government debt held by banks and the central bank (monetized deficits).
This project’s goal is to periodically track this new credit-based measure of money for Indonesia through a publicly available online dashboard. This will expose where money comes from and where it goes, equipping the public with clear, actionable insights and holding bankers and central bankers accountable for their actions.
Introduction
Mainstream economics is a mess. It teaches thousands of students fantastical concepts like price rigidity and the Phillips curve to explain inflation and monetary policy. These are distractions. The real driver of aggregate nominal spending—and therefore most macroeconomic outcomes—is the quantity of money, created, circulated, and destroyed through credit. Yet, it’s widely misunderstood, mismeasured, and ignored. Credit Watch aims to change that by focusing on the truth: money is debt, and tracking its creation reveals who truly controls the economy and dictates its trajectory.
What mainstream macroeconomics told you about money is a lie. They overwhelm you with complex equations and statistical jargon to distract you from asking the most important question: where does money come from, and where does it go?
Money
Money is credit. Full stop. Don’t let anyone tell you otherwise. Don’t let central bankers confuse you with their fictional monetary aggregates. Banks create money through the act of lending. When a bank issues a loan of $100,000, it creates an asset (the loan) and a matching liability (the deposit) on its balance sheet:
“The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it.” — John Kenneth Galbraith
In the cities of 17th-century Europe, gold served as the primary form of wealth. It was a practical way to trade goods and services in the market, but it came with a significant drawback: carrying it posed serious risks. The threat of theft and violence made transporting large amounts of gold perilous, much like walking through a modern city with piles of cash.
What once was a bold, curious attempt to understand how the world works has become an over-mathematized echo chamber obsessed with fantasies instead of truth. It didn’t have to be this way. But somewhere along the way, economics turned its back on the real world—and the consequences are obvious.
The economists.
Many of the greatest economic thinkers in history weren’t economists by training. Adam Smith and Karl Marx were philosophers. David Ricardo was a politician. John Maynard Keynes and John Nash were mathematicians, despite Keynes’ General Theory barely containing any mathematics. These thinkers weren’t just solving equations—they were observing, questioning, and challenging the systems around them.
This essay revisits the concept of startups—how they operate, why they are problematic, and what a better path forward might look like. Think of this as a subjective rant rather than a formal empirical analysis, drawn from my personal experiences as a software developer for almost six years and a student majoring in economics. Don’t expect rigorous data or academic citations; this is simply a reflection on what I’ve seen and learned over the past few years.