Talking to my brother made me think a bit more about WoW and the economy.   In the real world, the economy is either in a closed or open system.  A closed system says that there is a set amount of money to be moved around people and no new money can be created.  Think of this as a poker game with no buy-ins.  An open system has no controls on the money going into the pot.  The Zimbabwean dollar is a super good example.  They’re on version 3 and I think the conversion rate is 1: 1 trillion, trillion.  Just massive inflation.  In North America and Europe, we have a hybrid system.  You can’t print money but the banks can.  This is what drives inflation.  If it was closed, then the people are the short end of the stick could never buy anything since the rich would have it all (which is a sort of problem today).  In no system is there a way to remove money.  You might throw pennies away but that’s actually against the law.

WoW is like our world.  There are specific controls as to how money goes into the system.  The difference is that there are controls to remove money as well.  Quests and item drops add money to the system, in a controlled manner.  Blizz knows exactly how much money goes into the game everyday.  The removal is in money sinks or purchases.  So repairs, flights, AH fees and NPC purchases all lower the amount of money you have.  Auction Houses just transfer money between hands (though there is a nominal AH fee).  Inflation in a game happens when the controls that put money into the system are not proportionate to the ones removing money.  Since there’s always more money entering that leaving, the pool gets bigger.  People who are already rich are going to proportionately get richer in this model too, as compared to the average.  The old saying “it takes money to make money” applies.  In order to balance both the dispersion of wealth AND the lack of money sinks, Blizzard put in vanity items (mounts and bags) a while back.  They now have a Black Market Auction House where items are selling for 50-250K.  I have about 200K over all my characters, so even though I’m considered “rich” I’m still not rich enough for this market.

My monk is a great example of this problem.  When I started him, I gave him 800g to at least be able to afford a flying mount at 60.  He needed it as the gold input wasn’t high enough at my levelling speed.  Flying is likely a luxury for any new player.  By the time he hit 90 however, he had over 10K in cash and had spent an extra 10K on more flying options.  This was without using the Auction House once.  Obviously, the money taps are a tad too high as there’s no luxury for my monk, everything is affordable.  In the time since he hit 90, he sold all his cooking materials (meat from the kills), did some dailies (@20g per turn in) and ran some dungeons.  He’s over 20K now, with not a whole lot to spend it on.  It really makes you wonder how gold sellers are making any type of profit in game when money is absolutely of no concern anymore.