Felix said:
Inflation only occurs when there is a increase in the money supply, net of goods and services produced. So what if there is a lot of gold, as long as that supply of gold stays fairly consistent?
But if I take gold that's been buried in a hole in the ground for the last 1000 years and then introduce it into the economy, that is a big increase in the money supply, just as if a modern-day ruler prints a load of money.
Felix said:
The important thing is relative pricing
In a modern economy based on
money, where money is an abstract concept used to measure varying levels of wealth and backed by confidence in legal and economic systems, true.
But in a primitive economy based on
coins, where coins are a standard, measured quanitity of a rare and valuable material and have only value only by virtue of being constructed of a rare and valuable material, no.
i.e. in the modern day world I will happily sell you an ounce of gold for three one hundred dollar paper notes backed by the US government. But in a primative world, if you want me to sell you an ounce of gold you're going to have to give me a coin or coins which contain an ounce of gold.
Of course, all of the above only applies if you're looking for
external logic, and I'm probably making a pedantic argument. If you merely (as I do) want your settings to be
internally consistent, then yeah, broadly speaking you're right: relative prices are fine.
Although having said that, it would be more realistic, and much more atmospheric, to me if a gold coin was a very large sum of money (a year's wage for a peasant say), as used to be the case in our world. Cheap gold just doesn't seem right. If I was GMing a D&D game I'd be tempted to just divide both prices and incomes by a factor of ten at least.
I think part of the problem in the modern world, is that we are used to our standard units of currency being relatively worthless, with the averaging people earning many hundreds of them per week. Maybe the designers of D&D are making their prices fit that mindset.
Just as an aside, I had a search around and found a good site for comparing old and new UK prices (i.e. working out inflation).
http://measuringworth.com/calculators/ppoweruk/
For example, £1 in 1300AD is now worth £374.
(Although you have to take that with a pinch of salt due to the huge changes in the relative values of goods and labour and the fairer distribution of money).