Negative Interest Rates Could Be Necessary To Protect Uk Economy, Says Bank Of England Chief Economist

[Venger]

Nature and Nature's laws lay hid in night

God said, let Newton be! and all was light.

-ALEXANDER POPE's epitaph for Sir Isaac Newton

I do not know what I may appear to the world, but to myself I seem to have been

only a boy playing on the sea-shore, and diverting myself in now and then finding

a smoother pebble or prettier shell than ordinary, whilst the great ocean of truth

lay all undiscovered before me. - Sir Isaac Newton

October 15, 1989, issue of the Washington Post: "The Market Defies Logic".

This false conclusion like many others can be traced to a mathematically naive assumption that complex systems like the market ought to behave in a mechanical way, like a teeter-totter, with outcomes strictly proportioned to the known influences. When the Post's Steven Pearlstein wrote that the market defies "common sense," he was paying unconscious homage to a seventeenth-century model of reality pioneered by Sir Isaac Newton. Sir Isaac's brainstorms have informed a large part of the educated "common sense" of the Industrial Age. He described a universe that operated to mechanical principles, with change occurring on a gradual, proportionate basis.

Now a higher state of technology has laid the groundwork for a Post-industrial Revolution, as well as post-industrial science. The advent of powerful computers has given students of many different disciplines new means of analysing complex systems. The human economy in all its forms is such a complex system. The deeper science has probed into nature, the more it has become clear that complex systems at every scale, from the organs of our bodies to the super-galaxies in space, incorporate different forms of order than those our minds have been trained to perceive.

This is epitomised by the new mathematics of chaos, but the very fact that "chaos" has become the nickname of this whole realm of discovery betrays the extent to which its findings confound older "common sense" perceptions.

"Chaos" sounds like what happens when the Three Stooges direct traffic. In everyday speech, "chaos" means "utter confusion" and "disorder." The mathematics of chaos reveals hidden order by examining apparent disorder at a higher level of abstraction.

(How The Telescope Led Us To Compute; How The Computer Can Help Us To See.)

Much time and trouble stands between us and the day when these emerging mathematical insights will inform a new institution of "common sense," as second-nature as the old patterns of perception. Meanwhile, it is important to understand the deficiencies of "common sense" at all times and places, and realise how much our perceptions of reality can be distorted by prevailing systems of thought. [..]In ways that are never obvious, what "makes sense" to you is a function of the paradigm that is an unconscious part of your understanding.

However there are many different views of common-sense in the market - sometimes formed because we all have slightly different individual Operating Software in our minds, and some have only know long-wave good times and HPI, choosing to double down for more in the repeated future. I won't back down to 'common-sense' of the 118ers and PTers with multiple houses, debts backing their claims on resources to extremes (at such high prices), who believe in forever HPI and that Gov always had their back to pay very little tax.... smugging it over younger generations, and living it up in their own homes 'worth' £700,000 + all the bling cars and holiday on the backs of renters. There is responsibility for our market actions, not just cheap; 'no one could see it coming - begin the bailout' / make renters pay more.

Edited September 27, 2015 by Venger

[wonderpup]

What about the possible good side effects of no cash?

No tax avoidance, cash in hand trades, scrap yards etc

No liar loans

less drug dealing (for fear of eventually being linked financially)

more tax take, better schools and hospitals

As a PAYE drone it annoys me that I can't avoid tax like a multitude of other jobs, so I'm forced to pay my share.

no way of hiding cash.

Like many arguments for handing more power to the state these are good points but only if you can confidently assume that the state will not abuse this power. In an ideal world we could trust the state to act at all times in a benevolent manner. So if- for example- if it were proposed that all citizens be fitted with a chip to enable their location to be tracked at all times- for their safety-this would be a welcome and non controversial measure.

But I suspect that were such a measure proposed it would not be universally popular- which implies that at some level the state is regarded with a degree of skepticism by the majority of the population.

So giving the state the power to track all of our transactions- while not quite as intrusive as having a microchip embedded in our brains- still makes a lot of people uncomfortable- even though most of them have nothing to hide.

Edited September 27, 2015 by wonderpup

[winkie]

What about the possible good side effects of no cash?

No tax avoidance, cash in hand trades, scrap yards etc

No liar loans

less drug dealing (for fear of eventually being linked financially)

more tax take, better schools and hospitals

As a PAYE drone it annoys me that I can't avoid tax like a multitude of other jobs, so I'm forced to pay my share.

no way of hiding cash.

It would be nieve to think a no cash policy would stop any of that......there will always be other ways of doing business, an alternative......fags and toilet rolls anyone?

[jiltedjen]

governments can't act against our interests we all know that or this website would not exist.

I think electronic only cash, gold bans, etc is a terrible idea.

but it's also healthy to consider the potential pros to an electronic system. a slow erosion of the avenues of crime. maybe it's a small step to a better society. maybe the middle classes would be richer and have more spending power of the chavy cash-in hand Cowboys were forced to pay their fate share.

the housing problem will take years to solve but surely the honest should have stronger claims on the available housing stock?

[scepticus]

Physics wonk:

If economists wish their discipline to be indentified as science rather than a branch of aesthetics then they're obligated to use mathematics in their models and descriptions - I consider the failure to do so a sizeable short-coming of the Austrian School, for instance - but rather than create one postulatory confection after another they should be looking instead to discover the underlying invariance principles of macroeconomics and markets. Eugene Wigner showed us in his seminal essay 'The unreasonable effectiveness of mathematics in the natural sciences' that the four local invariance principles of space-time (translational invariance, rotational invariance, time-translational invariance and Galilean invariance) are the foundations that underpin the discovery of mathematical law in classical mechanics, quantum mechanics and general relativity. Wigner pointed out that without these underlying invariance principles, and the conservation laws that flow from them, the laws of nature would be too complicated for us to deduce*. This is exactly where we stand in trying to make sense of socio-economic behaviour. Neoclassical general equilibrium theory, on the other hand, simply asserts a belief in one global conservation law from the start and then ties itself in alexandrian knots trying to maintain a self-consistent framework in which this assumption still holds true.

*If Wolfram is right, and the Principle of Computational Equivalence true, then at the very deepest level the laws of nature are too complex for us to write down analytically. That being the case, the structure of the universe and its evolution could only be understood via numerical simulation.

There is no reason to believe that socio-economic dynamics don't exhibit invariance principles. In fact they must do so, because they are when all is said and done the same energetics and non-equilibrium thermodynamics that apply to all the rest of life and other non animate complex systems on the planet must also constrain socio-economics. The challenge is to identify the way these basic constraints manifest in the higher levels of social complexity.

There is also a question of terminology here - when I seek for an analytical approach to social dynamics I do NOT mean a mathematically analytical (as opposed to numerical) approach. I mean an approach which deploys critical thinking faculties to discovering what the invariance principles that apply to socio-economics are, rather than ideology and superstition (normally masquerading as common sense).

When I use the term analytic I am talking about a spirit of rational scientific enquiry. When I use the term 'equilibrium' I am generally using the term in the same way as it is used in the field of non-equilibrium thermodynamics, which is the field of science that underpins all life.

[scepticus]

Like many arguments for handing more power to the state these are good points but only if you can confidently assume that the state will not abuse this power. In an ideal world we could trust the state to act at all times in a benevolent manner. So if- for example- if it were proposed that all citizens be fitted with a chip to enable their location to be tracked at all times- for their safety-this would be a welcome and non controversial measure.

But I suspect that were such a measure proposed it would not be universally popular- which implies that at some level the state is regarded with a degree of skepticism by the majority of the population.

So giving the state the power to track all of our transactions- while not quite as intrusive as having a microchip embedded in our brains- still makes a lot of people uncomfortable- even though most of them have nothing to hide.

There seems to be an assumption that e-cash and no paper money materially increases the power of the state versus the status quo. Is that actually the case, given the way we live our lives today (routing much of what we do via bugged data centres and/or unaccountable corporates that run the data centres?

Possibly, railing against e-cash is tilting at windmills, and the horse has already bolted?

Secondly, its interesting to note that negative rates and e-cash have become conflated. I have argued in this thread there is no rationale for such a conflation. Whose interest is such a conflation in? Well, its in the interest of those who seek to perpetuate a rentier economy that is founded on non neutral money (e.g. PIRP only), if the reality is that we can have neutral money (NIRP or PIRP) but still retain the perceived social benefits of anonymous cash.

[Guest eight]

There is a popular school of thought that without exception favours the myth of common sense over analytical approaches when approaching complex problems. Within this school there are two separate philosophies. The first and least worthy is the tendency to equate "common sense" with "my beliefs".

The second viewpoint takes the line that previous analytical methods 'failed to see the crash coming', and therefore can never see the next one coming, thus justifying the fallback to common sense (which is actually little more than superstition, just so stories and ingrained political beliefs).

The most potent form is of course to combine the two, and then one can convince oneself of ones own relative genius to any number of over-analysing wonks or idealogues from the opposite end of the economic/political debate. Handily. this works equally well for left and right, and statists and libertarians. Either way, its an excellent way of justifying the suspension of ones own critical faculties, whatever they may be, in favour of the comforting blanket of common sense.

I suspect its a hangover from the general dislike and suspicion of anything vaguely intellectual that we all experienced one way or another in the primary school playground. The previously bullied have for the most part become the latter day bullies, wielding maths, dense terminology and the technocratic machinery of modern life to the detriment of those attributes that conferred dominance at school. The more technological we become the more this is the case.

Of course the result is increasing polarisation...

I just think a lot of people have innate and very effective ******** detectors.

[Guest_northshore_*]

I just think a lot of people have innate and very effective ******** detectors.

Alternatively, as the bullsh!t asymmetry principle states, the amount of energy necessary to refute bullsh!t is an order of magnitude bigger than to produce it.

[Confusion of VIs]

I just think a lot of people have innate and very effective ******** detectors.

Quite a few also have pretty effective ******** generators (NB not commenting on the earlier posts just life in general).

[Guest eight]

Alternatively, as the bullsh!t asymmetry principle states, the amount of energy necessary to refute bullsh!t is an order of magnitude bigger than to produce it.

That's exactly why I try to limit my input on threads like these to smartarse one liners.

[Guest_northshore_*]

That's exactly why I try to limit my input on threads like these to smartarse one liners.

Wasn't a statement on any view in this thread - actually fairly interesting - but something I try to remember yet still consistently fail to heed.

[scepticus]

I just think a lot of people have innate and very effective ******** detectors.

I don't think that is a widely held view on HPC, which tends as far as I can see to place most of the populace in a kind of 'sheeple' bucket who lap up the property shows and political nonsense.

[wonderpup]

There is no reason to believe that socio-economic dynamics don't exhibit invariance principles. In fact they must do so, because they are when all is said and done the same energetics and non-equilibrium thermodynamics that apply to all the rest of life and other non animate complex systems on the planet must also constrain socio-economics. The challenge is to identify the way these basic constraints manifest in the higher levels of social complexity.

I think where attempts to capture the behavior of men in any kind of physics like framework fall down is at the point where those men begin to model their behavior not on the basis of empirical fact but on the basis of their speculations as to the intentions and future actions of other men- no other system in nature displays this kind of recursive property in which the behavior of the system is a function of assumptions made by that system about itself.

And it gets worse- because knowing that the other will guide their behavior based on their speculations concerning your intent it becomes possible to attempt to model your own behavior on your speculations concerning their speculations about your intent in an attempt to gain strategic advantage. And by extension it further makes sense for the other to attempt to incorporate into their behavior their speculations concerning your speculations as to their speculations. Ect.

It's hard to see how any hard science could ever be constructed on this quagmire of speculation about speculation about speculation in which the end behavior might be visible but the process that produced it entirely subjective and thus not amenable to any kind of standard interpretation.

[zugzwang]

I think where attempts to capture the behavior of men in any kind of physics like framework fall down is at the point where those men begin to model their behavior not on the basis of empirical fact but on the basis of their speculations as to the intentions and future actions of other men- no other system in nature displays this kind of recursive property in which the behavior of the system is a function of assumptions made by that system about itself.

And it gets worse- because knowing that the other will guide their behavior based on their speculations concerning your intent it becomes possible to attempt to model your own behavior on your speculations concerning their speculations about your intent in an attempt to gain strategic advantage. And by extension it further makes sense for the other to attempt to incorporate into their behavior their speculations concerning your speculations as to their speculations. Ect.

It's hard to see how any hard science could ever be constructed on this quagmire of speculation about speculation about speculation in which the end behavior might be visible but the process that produced it entirely subjective and thus not amenable to any kind of standard interpretation.

Hard as it might be to model the reflexivity you describe, it has to be done even if the end result is something akin to high-energy physics - histogram bins with few reliable points of data and huge error bars. The alternative is to abandon reality altogether in the manner of the economists and central bankers and their absurdly smooth, interesecting supply and demand curves. Our goal should always be to try to understand how markets actually work not dress up some extravagantly mathematised ideal of a market than can never work in practice. True complexity is encountered in cellular biology too and yet the field continues to advance, spectacularly so when compared with economics, by sticking to the reductive principles of Galilean science. Economics must be practiced in the same way.

[R K]

There seems to be an assumption that e-cash and no paper money materially increases the power of the state versus the status quo. Is that actually the case, given the way we live our lives today (routing much of what we do via bugged data centres and/or unaccountable corporates that run the data centres?

Possibly, railing against e-cash is tilting at windmills, and the horse has already bolted?

Secondly, its interesting to note that negative rates and e-cash have become conflated. I have argued in this thread there is no rationale for such a conflation. Whose interest is such a conflation in? Well, its in the interest of those who seek to perpetuate a rentier economy that is founded on non neutral money (e.g. PIRP only), if the reality is that we can have neutral money (NIRP or PIRP) but still retain the perceived social benefits of anonymous cash.

For the record, I (at least) wasnt railing at e-cash per se. My post (that seemed to upset you so much) was aimed at Mr haldane.

Rather odd for you to be critical of "common sense" since it was haldane himself who promoted "common sense" over complex regulatory models which didnt spot RBS & BOS were crocks of sh1t.

You cant have your cake & eat it Sceppy, though Im sure youll give it a good go.

Btw, it was haldane who conflated NIRP with e-cash.

Edited September 29, 2015 by R K

[Venger]

Hard as it might be to model the reflexivity you describe, it has to be done even if the end result is something akin to high-energy physics - histogram bins with few reliable points of data and huge error bars. The alternative is to abandon reality altogether in the manner of the economists and central bankers and their absurdly smooth, interesecting supply and demand curves. Our goal should always be to try to understand how markets actually work not dress up some extravagantly mathematised ideal of a market than can never work in practice. True complexity is encountered in cellular biology too and yet the field continues to advance, spectacularly so when compared with economics, by sticking to the reductive principles of Galilean science. Economics must be practiced in the same way.

We wouldn't ever get anything done if we have to wait for the moment where it's all understood in such clarity. And at that time it wouldn't be a market full of different opinions, with the science of markets. Not today, with entirely different viewpoints of what is common-sense and superior insight. To some that's forever hpi. Some physics applies to markets, but not to level you can make it a science.

There's a reason the human lifespan is as it is. It encourages risk and change.

Humans are limited to an average lifespan of some 50 to 60 years (not 200 - 300 years, or 969 years like Methuselah) because long-wave crisis recur with that rough frequency. *'Three score and ten, or if by strength, four score.'*

Part of the answer is in the propensity of the environment to undergo nonlinear change. This increases the likelihood of some crisis that can be resolved only through heroic or risky behaviour - such as confronting an enemy in combat. In this respect a very long life expectancy could be a detriment to any group for who it was a common characteristic because it would encourage timidity. An individual with 900 years to live has 900 years to lose. A individual with 900 months to live may not be a daredevil, Evil Knievel leaping over Hell's Canyon on his motorbike, but he is more likely to be. By and large, life is cheapened as life expectancy falls. If individuals lived for a thousand years, a single life would be so dear that risky or heroic behaviours, such as fighting for the group, crossing the road, or even childbirth, would diminish.

A limit on lifespan optimises the flexibility of response by insuring the same generation is seldom in command during successive discontinuities.

The fact we don't live for centuries is also to help prevent institutional rigidity and opposition to change. The fact that death requires all human understanding to be relearned anew is an advantage as well as a disadvantage. Longer lifespans would strengthen further personal allegiances and limit intellectual flexibility and learning. Cementing existing values and ideas into place, petrifying existing social arrangements - blocking and resisting new ideas for system change.

In The Rise and Decline of Nations (Mancur Olson) he argued that resistance to change caused by the predominance of special interest groups in societies, is a major contributing factor to economic malfunction.

Edited September 29, 2015 by Venger

[Guest eight]

We wouldn't ever get anything done if we have to wait for the moment where it's all understood in such clarity. And at that time it wouldn't be a market full of different opinions, with the science of markets. Not today, with entirely different viewpoints of what is common-sense and superior insight. To some that's forever hpi. Some physics applies to markets, but not to level you can make it a science.

I think economics is like a few other pseudo sciences that I could name, but won't. You can either make it your life's work, or you can discover from only a superficial probing that it's essentially unknowable (too chaotic, too many variables, too much conjecture) and that it would be folly to devote too much of your time to the study of it. It's one of those things where it's genuinely not an excuse for laziness or ignorance to claim that the layman's view is as valid as that of the "expert".

[zugzwang]

We wouldn't ever get anything done if we have to wait for the moment where it's all understood in such clarity. And at that time it wouldn't be a market full of different opinions, with the science of markets. Not today, with entirely different viewpoints of what is common-sense and superior insight. To some that's forever hpi. Some physics applies to markets, but not to level you can make it a science.

There's a reason the human lifespan is as it is. It encourages risk and change.

The reason hom saps live to 80 and not 900 is predominantly due to the accumulation of transcription errors in our cellular DNA, something only science is capable of explaining.

I'd ask you to compare and contrast the changes brought about by molecular biology in the treatment of disease with the science-lite, magic thinking of economists and central bankers which has left the world in a permanent state of unchanging depression.

The study of economics needs more science!

[Venger]

The reason hom saps live to 80 and not 900 is predominantly due to the accumulation of transcription errors in our cellular DNA, something only science is capable of explaining.

I'd ask you to compare and contrast the changes brought about by molecular biology in the treatment of disease with the science-lite, magic thinking of economists and central bankers which has left the world in a permanent state of unchanging depression.

The study of economics needs more science!

Unchanging depression?

Not for many. Ultra-boom for many. Long wave prosperity. Including retire early, upsize to £440K house, and buy a BTL or two.

Maybe in part because we are living longer, those at higher end of power have more associations which blocks and resists market changes (hpcs), and so choose stimulus to support their own positions, and that of their connections. They really can get away with Generation Rent, ipods, being landlord masters to younger generations, in their minds.

I would prefer that hpc.

Perhaps it does, but at this moment in time, it's market participant vs market participant.

[Venger]

I think economics is like a few other pseudo sciences that I could name, but won't. You can either make it your life's work, or you can discover from only a superficial probing that it's essentially unknowable (too chaotic, too many variables, too much conjecture) and that it would be folly to devote too much of your time to the study of it. It's one of those things where it's genuinely not an excuse for laziness or ignorance to claim that the layman's view is as valid as that of the "expert".

It is. It is also captured by so many political/VI motivations. How do you science that in? I would like a pure system, but there are many VI in the mix who do not want to let go, it seems. Unless some are being tempted in, before a discontinuity (HPC).

[scepticus]

I think where attempts to capture the behavior of men in any kind of physics like framework fall down is at the point where those men begin to model their behavior not on the basis of empirical fact but on the basis of their speculations as to the intentions and future actions of other men- no other system in nature displays this kind of recursive property in which the behavior of the system is a function of assumptions made by that system about itself.

That is not correct. ALL living systems are information processing systems and all of them without exception must interpret signals form their environment and pass them through a filter which generates an output telling them what to do next. The more inputs an entity can take and the longer its memory of past inputs (and outcomes), the more complex predictions it can make. A simple microbe must sense chemical gradients, and take account of its internal state (nutrient levels etc) and then base its own behaviour (e.g. using its flagella to propel it in a direction that increases or decreases the said chemical gradient).

In fact, this generalises to inanimate complex systems which are able to maintain their overall structure (making internal alterations where necessary) in the face of changing environmental conditions. Examples include weather systems and water flow in river deltas.

The additional complexity introduced by sapience merely serves to introduce connections between elements that would otherwise not have interacted, and provides the elements of the system which more complex modelling and memory functions that span multiple elements. However this is merely a matter of degree and scale of the system under consideration, the essential attributes of the system are not changed. It is simply wrong to suggest that non-sapient systems don't exhibit reflexivity - if that were true then the earth's ecosystem could never have regulated itself.

The complexity of the socio economic system is of a scale that is comparable with the complexity of the earths biosphere. Both are exceedingly difficult challenges to understand and model but the tools that are appropriate to deploy are similar in both cases. And As Zugzwang pointed out the tools cannot be based on deterministic analytical models - they have to based on a new kind of scientific discipline that is capable of tackling complex systems that exist far from thermodynamic equilibrium, into which category both the biosphere and the cybernetic totality of the human sphere fall into.

[scepticus]

For the record, I (at least) wasnt railing at e-cash per se. My post (that seemed to upset you so much) was aimed at Mr haldane.

Rather odd for you to be critical of "common sense" since it was haldane himself who promoted "common sense" over complex regulatory models which didnt spot RBS & BOS were crocks of sh1t.

You cant have your cake & eat it Sceppy, though Im sure youll give it a good go.

Btw, it was haldane who conflated NIRP with e-cash.

My point about NIRP and e-cash conflation wasn't aimed at your argument - that was in response to someone else. Like I said before Haldane's conflation of the two is IMO wrong, but that doesn't mean he doesn't actually believe it himself. If he does believe it then he's not trolling and even if he does he may have a sensible motive for implying that he does in which case I would not call that trolling. What he did or didn't do about RBS/BOS is not in my view pertinent to his NIRP speech would ought to be assessed on the basis of their merits.

[scepticus]

I think economics is like a few other pseudo sciences that I could name, but won't. You can either make it your life's work, or you can discover from only a superficial probing that it's essentially unknowable (too chaotic, too many variables, too much conjecture) and that it would be folly to devote too much of your time to the study of it. It's one of those things where it's genuinely not an excuse for laziness or ignorance to claim that the layman's view is as valid as that of the "expert".

There is no aspect of the behaviours of large numbers of humans that is not driven by the laws of nature, known or unknown. Therefore it is in principle amenable to scientific enquiry of the correct kind using the correct tools. However, such approaches are unlikely to be unable to deliver levels of specific laws that might apply at a micro level, such as you might be able to derive for a chemical plant using the known principles of inorganic chemistry for example.

We live in a large complex system that incorporates our own accumulated social knowledge and constraints, our machines and our interaction with them, and our interactions with the natural environment we live in as well as our inter-personal interactions and meta-personal (e.g. relations between organisations) interactions.

We have to get to grips with this scale of complexity to ensure we can continue to live on this planet at the levels of energy consumption to which we have become accustomed. We have to get to grips with this scale of complexity to have a hope in hell of being able to materially improve the quality of life of our children, to have a destiny which doesn't leave us at the mercy of a rogue asteroid, and to have a shot at understanding how the human mind works.

If you are saying these problems cannot ever be tackled scientifically then you are saying the human race has gone as far as it can go.

Edited September 29, 2015 by scepticus

[Venger]

All this higher understanding patterns of order is way off into the future.

Look at what happened when some market participants thought they had the reality edge, with the mostly nerdy quant 'understanding' to try and trade the market to their advantage. Helped in part lead to more malinvestment, more waste (their crazy salaries), and another bubble/boom to where we are now. Chosen to lock it in and reflate it vs those who seemingly want new perfect market and... not a hpc? The bust. Blood and piss, the Great British Cocktail. The only rules that matter are these; what a man can do and what a man can't do.

By the time we reach this higher order state of understanding (which I hope we reach), I hope it's a world of abundance and new 'machine' minds taken over. In the short terms any higher order understanding will be used by those who think they have it (including many of the BTLers) to try and take advantage of others in the market.

[scepticus]

All this higher understanding patterns of order is way off into the future.

Well when do you suggest we start? How would we know when the right time is? At some point Newton and Leibniz had to sit down and work out the rules of calculus....

Bear in mind we already have developed a significant machine learning capability based on artificial neural networks that can translate languages and classify images in real time. Large scale pattern recognition is what these machines excel at.

Look at what happened when some market participants thought they had the reality edge, with the mostly nerdy quant 'understanding' to try and trade the market to their advantage. Helped in part lead to more malinvestment, more waste (their crazy salaries), and another bubble/boom to where we are now. Chosen to lock it in and reflate it vs those who seemingly want new perfect market and... not a hpc? The bust. Blood and piss, the Great British Cocktail. The only rules that matter are these; what a man can do and what a man can't do.

Yes big mistakes have been made but without these very visible mistakes how could the previously sacrosanct economic models have been debunked, as they now thankfully are?

How to decide what a man can and cannot do without a good understanding of the system in question?

By the time we reach this higher order state of understanding (which I hope we reach), I hope it's a world of abundance and new 'machine' minds taken over. In the short terms any higher order understanding will be used by those who think they have it (including many of the BTLers) to try and take advantage of others in the market.

That's a cop out.You essentially propose to have laws and policies while admitting you have no idea how the real system operates and moreover you also state you have no intention of attempting to develop any understanding. Also you are saying that we mustn't attempt to get at the principles underlying all this in case someone tries to use it to make a fast buck?

This is essentially placing you in a position analogous to the old church trying to prevent curious and principled men looking through telescopes to determine that the models in scripture were complete hogwash!