Isn't it interesting that the 'law' of one price does not apply to EU interest rates (north only, south only, EU-10, EU-17, EU-27 etc)?

Economics, although very cool, is not yet at a point/distance in it's evolution equivalent to that of the field of chemistry or physics. For example chemistry concepts such as stoichiometry, equilibrium constants, reaction quotients, and the Gibbs Free Energy Equation are able to describe and predict 'reality' more consistently than economic concepts can. Similarly physics concepts such as gravitation (both the newtonian and the einstein-ian/relativity approximations), electromagnetism, strong and weak nuclear forces are able to describe and predict 'reality' more consistently than economic concepts can. Humanity is fortunate that we are hardwired to continually strive and explore the 'boundaries', and so I believe that the field of economics will continue to move forward and improve it's descriptions and predictions.

As to the centrality of models, is not everything but a representation/shadow of reality/truth?

Perhaps Spaten Optimator (thank you economics and globalization), Bertrand Russell on the 'reality' of a kitchen table, and Kipling get us closer to seeing truth...

Rudyard Kipling, If

If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:

If you can dream—and not make dreams your master;
If you can think—and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ’em up with worn-out tools:

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’

If you can talk with crowds and keep your virtue,
Or walk with Kings—nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And—which is more—you’ll be a Man, my son!