I always wondered how D&D keeps a stable gold-based monetary system with high-level Wizards around. It should be fairly trivial to make huge amounts of gold by magic and drown the economy in inflation. Paper money with hard to copy arcane sigils would be much more "realistic", at least for higher amounts than pocket change.
But I guess that's a different question.
Law of Diminishing Returns/Negative Returns. Wizards don't want to sit around creating things that burn their XP because XP is their resource. At some point they will negative their level and make themselves weaker.
Honestly? Make it so all items have a Condition modifier, and a Repair cost. It works in D&D Online, it works in multiple other games, and there were always factors (rust, Sundering, Disjunction) that made this a common happening in early D&D... Just noone uses it because it is 'unfair' and player's goods are 'precious'.
Guns last for 6 seconds of use with perfect conditions (3k rounds) with a masterwork item. Lances,
swords, and pikes broke all of the time. Ancestral weapons? Patched, repaired, reforged, recast, redesigned over time... And now they sit on a shelf unused. Magic would make a harder weapon, better edge... But I would consider a Hardness of X allowing for a weapon to last in combat use for 1.5-2x its normal use, with various materials (cold iron, adamantine) lasting longer, and others (silver, rare elemental blades) lasting for shorter. The players invest in keeping their equipment at top-notch quality, and they should get a bonus for it, then a penalty, then a break condition (DC: 10, modifier Current Hardness +7). It is very difficult for the item to break, but it begins to go into 'negative hardness' each time it saves. So an Adamantine Blade has a Hardness of 20, and a special material factor of 3. The blade gains +2 Hardness and +10 HP per enchantment bonus by RAW. Elemental effects weaken the blade's otherall 'toughness' by 2*enhancement bonus.
The base adamantine blade will last between 90-120 battles before it needs to be worried about. The blade is found in a condition of 50 + 5d10% when intially encountered.
The Blade's gain bonuses based on manufacturer, and certain manufacturers can apply different bonuses. Perhaps the dwarven bladesmiths use an alloy rich in natural occurring mithril impurities when making their Masterwork blades, providing additional Toughness (+5 toughness). The smith of the Imperial Host forges blades so elementally pure that they can withstand the forces of elemental binding. Masterwork +1, +2, +3 weapons can be found if one looks for them that do not provide any magical bonus but do provide bonuses to hit for their perfect balance and weight.
It prevents magical 'creep' because a player may gain an Adamantine Dwarven Masterwork +2 blade that will last him for his entire adventuring career with some repairs, using enchantments or other objects to imbue the ability to hit Magic DR, and the blade will naturally fall apart. Even the most powerful magical blades fall apart, though it is rumored that a smithy in the highest heights of the Alustrian mountains can create a blade using the pure thin air and secret mystic metallurgy that never dulls...
Or he might be running a
dockside sushi shop, hiding from the mages who demanded his blades to create the weapons for a group of Imperial assassins whose bloodstains he cannot clean from his hands.
Slainte,
-Loonook.