In a feeble attempt to defuse a discussion that's likely to get MODded...
In our game our Paladin of Freedom was looking for information on the local ruler, a man known to be a Necromancer. He was thinking of trying to overthrow the ruler.
He stopped and asked a peasant farmer's opinion of the ruler: Was he oppressive, cruel, greedy or evil? Did the people live in fear of him and his undead minions?
The man answered and gave an obviously Reader's Digest version of his opinion, knowing as he did that peasant farmers *always* say that they love their noble rulers, at least when talking to strangers. Yet, over all the man was truthful: Yes the undead scared him. The monsters who lived around the valley, who the undead were tasked with stopping, scared him more. No, the lord wasn't cruel or evil, though he really was an iron-fist type when it came to keeping order. His laws and rules weren't arbitrary, etc.
The Paladin thanked the man and gave him a reward for his time and trouble. 100 gold pieces.
The bounty just about knocked the man off his feet. That gift, so minor to an 8th level PC, was close to two year's income for the farmer, and his "income" usually came in the form of goods and services he bartered farm produce for. Actual coin, in such volume, was something that peasant farmers just don't see.
In an actual agrarian-based medieval setting, an awful lot of the economy was handled on credit and barter. There simply wasn't enough gold or silver available to handle most day to day business, particularly at the low levels.
A farmer has "income" a few times a year. depending on the climate and region he might get two crops in a year. He'll split his fields into four, with one laying fallow, and the others chosen so they don't all come to harvest at the same time, so he can spread the work load across more time.
Even so, other than minor day-to-day stuff like selling eggs, butter and milk, or garden vegetables, he had almost nothing to sell for most of the year.
Generally this meant that he either did for himself and his family, bought on credit, or did without.
Rents and taxes were paid on the "quarter day", which meant March 15th, June 15th, September 15th and December 15th. Often they were paid with a share of a crop being harvested, or the promise of a share when one was.
There was a debate at the table about whether the farmer would be wise and hide his sudden surplus away for a rainy day, or would he venture into town and spend like a drunken sailor. With the understanding that the latter would likely get him accused of theft, withholding on taxes (three copper on the gold was common), or just killed and robbed.
This put the Paladin in the uncomfortable position of possibly getting the helpful peasant imprisoned or killed.
The difference in scale is that sharp.
Note that, IRL, a wealthy merchant or even a minor noble might have buttons of silver and/or pearl that were worth more apiece than a peasant would see in half his life. The wealth gap between the Haves and the Have Nots was even more pronounced than it is in America today. Except then it was the upper 3 to 5 percent, not the one percenters.
The lack of a real middle class, particularly during the dark ages, made that gap all the more visible.
In our game settings we presume a fantasy time setting when there is a middle class, and when people aren't serfs (essentially slaves) bound to the land. Social climbing was legal and possible, unlike the real world of the middle ages.
In this framework, PCs are essentially social climbers, people who left the farm or the work house to try and better themselves. The basic "starting money" they equipped themselves with at 1st level may have been theirs or their family's life savings.
So, is the economy broken? Of course. Neither Gygax nor those that followed after appear to have been very concerned with designing a viable economy. That wasn't their focus. As a result a lot of players and DMs have to sort of look the other way and say, "Pay no attention to that man behind the curtain". They have to pretend that the oddities and impossibilities simply aren't really there.
Consider this: In 4th ed it costs as much, in material costs, to craft *anything* as it sells for at full market price. That means that no one can make a living. The only thing that keeps the economy turning at all is that PCs go out, loot places, and sell the stuff for a fraction of its actual value.
If not for adventurers, the economy would stagnate, civilization would crumble and people would starve.
Now *that's* broken. D&D 3.5 is a cake walk by comparison.