A thing that is not understood, and then widely misunderstood, is the role of compression in intelligence.

Many people nowadays are familiar with this idea as pertains to machine learning: a common critique in model evaluation is that the model has simply memorized the training set. This does in fact happen, most often when the model has a huge number of free parameters. It has so much capacity that it can simply encode what you give to it.

The most useful behavior comes when the model has a lot of capacity, but way less than what it would take the memorize the relevant training corpus. So for it to do anything interesting, it has to basically compress reality -- to find patterns in it that it detects with reasonable fidelity. If the system can do this, we say that it generalizes.

This is what the brain does, too. Compression and generalization are at the heart of intelligence. (Early work on this is filled w/ attribution controversy.) The limitation -- the collapse of the vector to a scalar -- is what makes it so powerful. It's what lets you recognize diverse situations as, fundamentally, instances of the same kind of thing.

It's also interesting to note that different kinds of brain damage ruin this ability in a surprising way: by giving the person nearly total recall. So the person can remember everything, but, like the model with too many parameters, can't really think. The most famous example of such a case is memorialized in this Borges story.

Anyway. It's intriguing to consider this wrt money, which is a great compressor, as you and @siggy47 are mentioning. It makes money hugely useful, but dangerous, insofar as what is left out of that invisible hand's grasp may be vitally important.

We talk about leaving out bad consequences as externalities, and there are different attempts to mitigate that, but what about leaving out good things? What happens to a value computation that doesn't include the most important thing about being alive, or systematically leaves out the concerns of millions or even billions of beings, whether they're slaves in 1850, quasi-slaves harvesting rare Earths in Congo, women a century ago, or all the animal life on the planet, in perpetuity?

What do you get, then? This amazing system that computes value, what are the consequences of the value that it computes? And I wonder if there's such a thing as a money that captures too much, like an overfit model, or like poor Funes?