ABSTRACT
It is often implicitly assumed that economic events can be understood through direct observation. This may be one of the reasons why economic analysis is mainly carried out in microeconomic terms. Monetary analysis is no exception. Even though concepts such as income, saving, investment, interest and capital are mostly considered at the national level, they are almost inevitably arrived at through a process of aggregation of their microeconomic components. If, as is widely believed, macroeconomics were simply the result of such an aggregative process, microeconomic variables would be the only relevant object of enquiry of economic analysis. This would not imply, however, that economists are to limit their analysis to direct observation. In particular, this would not allow them to define money irrespective of its peculiar, immaterial nature. Even at the microeconomic level, money remains a numerical form issued by the banking system. One important point of our analysis is therefore the fact that monetary economics requires a thorough investigation over and above mere factual observation, centred on a clear understanding of the banking nature of modern money.
