Can meditation cause harm?

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Prana may give access to power and higher consciousness and if the person doesn't know what he's doing, that power can damage him.
Guidance that provides him/her with a good foundation could help.

I think we're kinda limited.. in terms of what kind of magic we could practice without going nuts.

I would tend to agree with your observations here. Still, that leaves me wondering why Ra and/or Q'uo would neglect to mention this. (Again, maybe I missed something somewhere as it is a massive body of information to sift through.)