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Set in fantasy medieval times, monsters can be seen loitering around the kingdom. People discovered that the slain carcasses of these monsters contain a certain quantity of gold coins. The rest is history.

It seems these monsters continually respawn, so potentially there is no limit to the amount of gold being dropped over time. How is it possible for the trading value of gold in such a scenario to remain constant while an exponential increase in the number of monsters over the last decade was reported?

Please note that, at the beginning, when the monsters first appeared, it would require an extremely large effort to defeat a single monster. More recently, more effective strategies and weapons against the monsters have been developped, thereby reducing the required effort to a mere fraction.

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    $\begingroup$ This is exactly where a lot of games are struggling with. World of Warcraft has a massive online economy that is bigger than any dataset. It has the same problem and the creators are doing a lot of things to mitigate this. Economists are thus following this progress slowly to learn from this for the real world. You might start there. $\endgroup$
    – Trioxidane
    Aug 9 '20 at 10:36
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    $\begingroup$ Note that as your economy grows - so , simply, as your towns get bigger and the population increases - it's perfectly OK / good normal / correct that the money supply increases. This is literally and exactly what happens in the real world with gold money, and nowadays with government money. $\endgroup$
    – Fattie
    Aug 9 '20 at 14:50
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    $\begingroup$ How do gold coins get into your monsters? In games, we assume that they've eaten the previous hunters. So the gold supply doesn't actually increase; some hunters carry it from town, others bring it back. $\endgroup$ Aug 9 '20 at 15:52
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    $\begingroup$ Ooooh, +1 to @ShawnV.Wilson, that was an astute question that carries the kernel for a good answer. $\endgroup$ Aug 9 '20 at 21:16
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    $\begingroup$ @Trioxidane This is also a plot point in the book Halting State by Charles Stross, which is about a robbery in an online MMORPG - the game developers need to actively manage the money supply to try to prevent inflation by running a bank inside the game $\endgroup$ Aug 10 '20 at 15:30

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Stuff appears. Stuff also disappears.

There is a large but finite amount of gold coin. When a monster spawns out of nowhere, gold coins to accompany it disappear from their various locations elsewhere and reappear on the monster.

The chance of any given coin disappearing is very low, and so only a few people realize that is what is happening. Playing the odds, most of these reallocated coins disappear from large hoards that are locked away and not frequently checked. Persons who find themselves missing a coin assume they lost it or were robbed. The monster did not exist a second ago and so does not wonder where the gold came from; it has always been in its vest pocket.

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    $\begingroup$ Simply using Genuinely lost gold or Gold stolen by monsters is also viable. If a dragon just razed a town and hoarded all their gold that dragon won’t notice if a small fraction of the coins are siphoned off to produce new monsters. $\endgroup$
    – Joe Bloggs
    Aug 9 '20 at 8:42
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    $\begingroup$ This reminds me of spartan iron coins which were intentionally made to degrade and loose value over time to intentionally prevent hoarding of wealth. If currency is measured by weight, then you could have each new spawn shave a few molecules off of each coin instead one whole coin just popping out of exisitance. $\endgroup$
    – Nosajimiki
    Aug 9 '20 at 15:44
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    $\begingroup$ Ironically, this would make the monsters the true heroes and robin hoods, redistributing wealth. $\endgroup$ Aug 10 '20 at 17:01
  • $\begingroup$ Simplest option: don't have gold on the monsters in the first place. Also a rich tax to be paid monthly could do it. Finally, your hundredth Orc may simply drop less than the first until the Orc people's gold is replenished by your method... healing's a good one, too. Why is healing for free? Remove all healing spells or reduce them to single use per dungeon. Then sell bandages, healing potions surgeries and the like. $\endgroup$
    – Anderas
    Aug 10 '20 at 17:24
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    $\begingroup$ If the amount dropped by monsters is small, this won't be noticed easily, but then, it wouldn't have much of an effect on the economy in the first place, so this solution sort of requires that there's no problem to begin with. If the amount dropped by monsters is significant enough to have a potential effect on the economy, we're probably talking about at least a few percent of everyone's gold disappearing each year, which will be a bit more noticeable. If monster-killing is indeed increasing at an exponential rate, this will eventually become a big problem. $\endgroup$ Aug 11 '20 at 18:36
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Monsters get killed.

Gold comes out.

A "Hero" takes the gold.

They buy a sword.

With it, they commit more murder on innocent monster natives.

They buy another sword.

However, they never sell the old sword. The Smith therefore receives no used metal to use as material source and has to constantly use the gold to buy more metal from lands far away.

The gold finds its way to the mountains, where it is finally traded for ore and coal, both of which you need unreasonable amounts of because no hero ever sells their swords.

In the mountains, it is given to creatures who promise to get the desired ore out of the caves. They go into the caves with gold. They come out with ore.

They are not called monsters here. They're just the workers. Sometimes a "hero" comes and kills them, to present "their" gold afterwards as if it were something to be proud of.

Sometimes the monsters rally a revenge attack, but not often. "Heroes" are everywhere. It's quite deadly outside.

One riddle remains unsolved. Many "Heroes" have been seen to stand around in places. They don't move anymore. They just stand there. Eternally. Still, they're not dead, so no one inherits their tons of swords and armor. And they don't sell.

That's the way it is in computer games.

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    $\begingroup$ I thought the way it was in computer games was hyper-inflation. $\endgroup$
    – user253751
    Aug 9 '20 at 15:19
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    $\begingroup$ @user253751: Typically computer games use "gold sinks" (i.e. expensive things players can buy that siphon gold out of the economy, and are usually of little to no gameplay value, such as cosmetic items, housing, mounts, etc.). $\endgroup$
    – Kevin
    Aug 9 '20 at 18:05
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    $\begingroup$ @user253751 only in very bad games :-) $\endgroup$
    – Anderas
    Aug 10 '20 at 6:08
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    $\begingroup$ @user253751 here's an (IMO) incredibly interesting video about MMO economies $\endgroup$
    – MindSwipe
    Aug 10 '20 at 12:53
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    $\begingroup$ It basically says: the problem is that monsters drop coins. And that players can sell rat furs and stones and the like. A game allowing this more than once or twice is kind of stupid right? $\endgroup$
    – Anderas
    Aug 10 '20 at 17:19
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The wizards creating the monsters are being paid in gold, which they use as an ingredient in the monster spawning spell. The gold is used but not consumed, so it ends up with the new monster.

Because the monsters kill livestock and travelers, and a pre-industrial society is hugely dependent on agriculture, the kings have been emptying their treasury, giving wizards the means to create more and more powerful monsters to put in the rival kingdoms. The kings send knights to kill the monsters in their own kingdom, which get taxed on the loot; plus what they keep they spend that on new armour and at taverns, all establishments also being taxed by the king. So the money always makes it way back to the treasury, and the cycle is complete.

There is an arms race going on between monsters and knights. More powerful monsters require more gold to create, but that in turn attracts more capable knights. Monsters are getting easier to kill because the knights are winning the arms race, and they are becoming more numerous as the kings attempt to compensate. It all might change if new innovations in monster magic make the next generation of beasts unstoppable.

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    $\begingroup$ +1 It's not just the gold that has to appear from somewhere, the monsters have to come from somewhere too. $\endgroup$
    – IceGlasses
    Aug 9 '20 at 12:16
  • $\begingroup$ Wouldnt it be more useful to keep the gold? Your enemies spend gold on monsters, you kill monsters and eventually the gold of the opposition runs dry. You have a comparatively rich country with a strong economic might if you want, and if you really want to be nasty you now have a gold hoard to swarm one enemy with enough monsters to guarantee a failed crop and famine. $\endgroup$
    – Demigan
    Aug 9 '20 at 17:00
  • $\begingroup$ @Demigan while you're hoarding gold and sparing your neighbours their regular dose of monsters, they will have record-high harvests and increased commerce as people are no longer afraid to walk the roads unprotected. The king having a big treasury also does not necessarily make the country rich. Obviously there's different tactics for monster investment; it's a bit like the stock market. $\endgroup$
    – KeizerHarm
    Aug 9 '20 at 18:22
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    $\begingroup$ @KeizerHarm the surrounding kingdoms would still keep up a certain amount of monsters, right? But while you have pumped gold into production, industry and warfare to protect against these monsters, the total gold available for monster summoning will drop across all countries. But yeah, tactics will differ in how these monsters are released and where. A solid border patrol might be able to intercept a lot of the monsters before release (no one will release them in their own country) and then send the monsters back or just kill them in the cage for gold $\endgroup$
    – Demigan
    Aug 9 '20 at 18:47
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    $\begingroup$ @Demigan You have to remember that currency is in general useless (once you have enough to lubricate the economy). Gold coins aren't wealth, they are an accounting measure for wealth. Accounting measures are powerful, but they don't generate wealth. See the Spanish after they conquest of the Aztecs. Having a huge pile of coins but no wealth backing it up results in economic distortion and collapse more than it does super productivity. $\endgroup$
    – Yakk
    Aug 9 '20 at 21:39
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Monster whomping mostly replaces mining

If, in addition to your monster-based economy, gold is still being mined the old-fashioned way then it might be less valuable than in mundane history. But if gold mines are much less prevalent, or unheard of, it will still probably be valuable.

See, if you take a step back, mining is a sink for a lot of resources: time, money, people. Digging holes into the earth to get at ore veins is expensive and dangerous. Takes a long time. Gotta make sure they don't collapse. Sometimes they do anyway. And the miners have to get paid.

Monster whomping as the ultimate source for gold is actually pretty similar when you look at it that way. The monsters probably aren't terribly fond of being whomped for gold. They have jaws that bite. And claws that catch. So - much as with mining gold the boring way - you have to spend money (and manpower) to make money.

As it gets easier to kill monsters, costs go up

It's 'easier' because of better technology, large-scale (and thus more expensive) farming techniques, and significantly more skilled wizards and warriors being much more productive. All of this means it costs more.

Abandon the gold standard

Mining technology gradually improved, from stone tools to metal pickaxes, to setting huge bonfires (fire that hot weakens the stone) to black powder to modern power tools. So this source of gold isn't really different in kind; it differs only in the details.

Now, I'm no economist, but here's an interesting article explaining why the gold standard was abandoned. Basically, gold being the base unit of all currency causes price instability, and is also blamed for destabilizing the financial system as a whole.

In other words, these gold coins aren't actually money. They can be exchanged for whatever your world does use for money, making them clearly still valuable.

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    $\begingroup$ In Rome, when you had a slave or prisoner you wanted to get rid of, you could either send them to the mines or the Colosseum... in this case, they are one in the same punishment. $\endgroup$
    – Nosajimiki
    Aug 9 '20 at 16:55
  • $\begingroup$ I mean yes, but also, no. it would replace mining for Gold in most scenarios. Mining is still very necessary. (and who would say no to getting gold without risking a fight with monsties if the opportunity arose if you chanced upon some?) $\endgroup$
    – IT Alex
    Aug 10 '20 at 13:37
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    $\begingroup$ It's the author's fantasy world. They can do as they see fit. If easily mined gold deposits simply don't exist, or even are much rarer than they are in our world, then it doesn't matter that you would mine it if you could - you can't. Perhaps it was simply never there to begin with. Perhaps hundreds of years ago the mines were mined out. $\endgroup$
    – Ton Day
    Aug 11 '20 at 0:39
  • $\begingroup$ The OP's scenario says that it's getting easier to kill monsters, so this answer doesn't fit. $\endgroup$
    – toolforger
    Aug 11 '20 at 12:13
  • $\begingroup$ doesn't it get easier to mine gold with progressing technology? $\endgroup$
    – carlo
    Aug 11 '20 at 16:30
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Gold Must Leave the System

The only way for a system where gold coins can magically appear requires that there is a way for them to magically disappear and thus be removed from the economy. As such here are several ways the gold coins could be removed from the system:

The gold coins become an offering to a god

The idea is that the gods intentionally put special gold coins on monsters that appear since the gods do not like monsters and want to motivate humans to get rid of said monsters. A person kills a monster and collects the gold coins which can be redeemed through an offering to a god for a blessing. When done so the coins vanish, and they receive either a random or predetermined blessing from said god based on the amount offered up and the nature of the god they are offering to. So lets say a couple are having trouble having a child, they could offer up a sizable offering to a fertility goddess in the hope that she will bless them with a child. Planning on leading a large war against a neighboring country? Better give a larger offering to the god of war than the country you are planning on invading.

They are used in magic

The coins appear when a monster appears which means the coins have certain magical traits imprinted in them. As such they are used as a type of fuel for gate and summoning magic which consumes them. So if you want to use the gate system to travel around the various kingdoms you have to literally use the monster gold coins to do so. As such the trade economy relies heavily on gold coins to fuel the transport system to provide a quick and safe way to transport things across the kingdoms. Want to summon a hero from another world to defeat the current demon king, or send said hero back to the world they came from? Well you will want a mountain of gold coins for that, and sadly since the coins are destroyed during the summoning process if you are unsatisfied with the hero you get there are no refunds.

Easily transmuted into other forms

Alchemists love focusing on transmuting lead into gold, when they should be looking at the reverse. The gold coins that come from monsters are easily transmuted into other raw materials (and conveniently cannot be easily transmuted back into gold). Also if the material being transmuted to is common then the resulting mass increases. So transmuting one small gold coin could yield several bricks or several pounds of stone. In fantasy stories have you ever wondered where they get all the building materials to make those huge castles and walls? Now you know.

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The monsters eat gold ore and thier digestion turns it into coin shaped objects. It takes time for the monsters to eat alot of gold to make one coin, so killing a young monster does not net you much gold. In the past you could kill giant ancient monsters that have had time to accumulate a lot of gold. But now due to over hunting there are only smaller younger monsters that haven't had the chance to eat much gold. That's also why it's now easier to kill them.

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Real world already has answer to your question. Gold mines exist, they continuously pump gold into economy. Yet, gold inflation doesn't happen. Why? Because as economy grows, more and more money is needed in circulation. As long as the supply doesn't exceed economy growth, inflation won't happen. Note that while the total supply of monster coins seems to be infinite, the supply rate is limited by the monster respawn rate and human ability to kill them. Only rate has to be limited.

But what happens when the gold supply is not enough? Well, letters of credit, collateral and many other financial instruments happen that let people continue trading without actual gold, culminating in fiat money. That's what happened to us, because we didn't have gold-yielding monsters.

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    $\begingroup$ Actually in the real world there is an example of this happening. The Spanish brought so much gold and especially silver home from South America that the market was glutted and the price fell, thus ruining South America and their own economy at the same time. $\endgroup$
    – RedSonja
    Aug 10 '20 at 5:59
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    $\begingroup$ @RedSonja Yeah, but that happened all of a sudden and we're talking about constant supply. $\endgroup$
    – Agent_L
    Aug 10 '20 at 8:28
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    $\begingroup$ There was a reasonably constant supply from 1550 to 1790: en.wikipedia.org/wiki/… $\endgroup$
    – user662852
    Aug 10 '20 at 20:29
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Very few people are actually capable of killing the monsters. Most of them get killed.

As a consequence, there is a trickle of gold coming into society. This is economically beneficial because there is, in fact, a serious shortage of coinage. New gold gets snatched up to replace inefficient barter, and make purchases that would have been too pricey if you included the time wasted working out what you could barter. Thus, economic activity increases to the new limit imposed by the amount of coinage, until the next batch comes in.

It would help if some of them dropped silver or copper instead. This would help with making change. Increasing small coins can also increase economic activity.

If the situation had just changed so that killing can be done more effectively, that's when things start to go haywire. Not centuries earlier, only when the trickle becomes a flood.

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Gold is a resource used in magic.

I started a story myself where the most powerful mages spend their days with rituals to stem the tide of monsters and invaders. In your case the gold has some sort of connection to the monsters, and even if you dont have "regular" magic you could have the gold end up in the Government's hands and use it in rituals that attempt to stop the exponential (!) Increase in monster appearances. This eliminates gold from the economy.

Just imagine how overrun those poor people would be with monsters if they didnt do those rituals...

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Monsters run a protection racket

Local farmers and townspeople pay a toll to monsters to avoid being preyed upon. When a hero comes along s/he kills a few local monsters and steals their gold.

If the hero is Robin Hood then he gives most of the gold back to the local people. They throw a feast for him and he goes on his merry way.


The amount of gold in circulation remains approximately the same. There will be lost hoards and gold-ming going on but in total there is not much change.

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The Monsters were people

A subtle curse a long time ago has produced a terrible new reality.

At intervals, a villager will find themselves compelled to wander away from town, find somewhere secluded and transform, body and mind, into a monster.
The curse ensures that nobody remembers they existed pre-transformation, it simply seems as though a monster has appeared on the outskirts of town, or in a basement, or attic...

If the monster transforms too far away from home, they will wander in search of the familiar, eventually making their way home and bringing them into conflict with the town.

The coins belonged to them before their transformation, explaining why the amount of gold acquired is usually pocket-change. A former merchant might well have been carrying more money or unusual items.

In this way, the coins are not increasing in number significantly, the villagers are paid for goods and services, and eventually transform into monsters themselves. The gold is returned to the community when a Hero slays them and brings back the gold as loot.

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Let me try a answer.

Biomagnification

That is a real world phenomena:

Biomagnification, also known as bioamplification or biological magnification, is any concentration of a toxin, such as pesticides, in the tissues of tolerant organisms at successively higher levels in a food chain.

In your world there are no gold mines. Gold is extracted from the depths of the Earth by plants through deep roots. Extracting gold from plants gives a very low yield due to low concentration and because 100% pure gold does not form a stable solid (you need an alloy with some other metal).

Herbivores eat plants and accumulate gold in themselves. Then carnivores eat herbivores and accumulate it in higher concentrations.

Gold is usually excreted through feces and urine but due to the accumulation process animals have an ever harder time getting rid of it. That is why you get more gold the higher up in the food chain your innocent victim the monster is.

As for why it comes in coins, due to an orthologous set of genes most creatures in this world accumulate gold in their connective tissue as alloy discs, usually being 75% gold, 10% copper, 5% iron, 5% nickel and 5% other impurities. These coins are not all the same shape, size and exact composition, but they are easy to reforge into standard realm coins at any mint. Since you practically get one standard gold piece for every raw coin, the gold recently extracted from monsters is also accepted as currency and tender in small villages and other settlements.


You may be wondering how the economy manages to be stable this way. Remember how I said there are no gold mines? Monster hunting replaces that activity and gives out the same output over time. However in your world the economy is growing at the same pace as gold becomes available, so things even out.

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    $\begingroup$ That seems an answer to why the monsters come with coins - not how the price of gold remains constant as more monsters dropping gold spawn all the time, and at an exponentially increasing rate at that. $\endgroup$
    – KeizerHarm
    Aug 9 '20 at 11:48
  • $\begingroup$ @KeizerHarm momster hunting replaces gold mining. $\endgroup$ Aug 9 '20 at 16:23
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    $\begingroup$ Unlike mining, monster hunting has become exponentially more rewarding over time (as the question states) yet the price is stable. The price of gold dropped in Spain when they got a surplus. The question as I understand it is more about an economic model than biology. $\endgroup$
    – KeizerHarm
    Aug 9 '20 at 16:26
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The monsters respawn at almost the exact pace the economy grows.

(because... Monsters depend on some waste of the tax administration internal rituals? Monsters multiply exponentially just as an adequate economy does... most of the time? Monsters are proportional to the number of the adult population? Each monster is a virginity lost somewhere around?)


This is (minus magic and plus a lot of politics) how modern ("fiat") money in a more or less well-behaved financial system work. The economy grows, so does the money mass in just a bit faster pace. Each year you get more goods and services at almost the same price. You need just a tiny bit of healthy inflation, or the people stop spending and the economy halts.

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Humans Die Too!

I mean, why do people bother killing the monsters? We don't go around killing random deer and turkeys in a genocide of bloodlust, because they are not considered a threat. The villagers attack monsters because the monsters attacked first. They are a clear and present danger. And when they kill a villager, they scavenge for shinies, because that is their instinct (and the same instinct which causes dragons to gather hoards of treasure). They don't kill for food...they kill for shinies, and they have learned that villagers (and especially heroes!) are a good source of shinies.

Unfortunately, the humans have been getting stronger and smarter about fighting monsters. But the monsters have the advantage that they do not need to reproduce in the slow manner of humans. They can just spawn, seemingly out of nowhere. But in order to obtain gold, they must participate in an attack on hapless villagers.

Sometimes They Don't Die

Because the monsters are not hungry, they don't usually eat their victims. They just scavenge for shinies. This often leaves villagers alive, but bankrupt. The monsters are mindless thieves, though they would never describe themselves that way. Sometimes, the villagers realize it is better to play dead, with a bag of shiny coins in their outstretched hand, than it is to fight off monsters with a pitchfork and scythe. This way, the humans live, but the monsters acquire gold.

Monster Society

Monsters don't have a "society" or "economy" the way humans do. They mostly eat animals, just like the humans do (which explains the grisly carcasses which can be found from time to time). However, they have a kind of proto-society/economy which revolves around shinies. They collect them. The bigger monsters can attack richer humans, and thus gather more shinies. Smaller monsters can only prey on weak villagers, who offer a pittance of shinies. Sometimes, bigger monsters will earn prestige and followers by giving away token shinies to smaller monsters, who then go on raids with them. This is how some monsters end up with shinies even though they never attacked a human. This is how monsters left behind to defend the burrow/den/whatever end up with coins, even though they are glorified babysitters/guards. Every monster wants shinies. Every monster gets shinies. But the total quantity of gold is perfectly normal, and only grows with mining, and shrinks when a gold-laden ship founders and sinks to the bottom of the sea.

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The Value of a Good Logarithm

The amount of gold available remains constant, which means as the number of monsters grows exponentially, the amount of gold derived from a monster decreases logarithmically.

Nullify Anti-Monster Combat Skills

As the monster population increases, so does their combat acumen and strength. In other words, it's harder to kill the monsters as they grow in numbers. This offers a motivation to deal with the monster threat ASAP to avoid the obvious side effects, which also has the effect of keeping the amount of gold somewhat constant. In short, it nullifies the increasing experience and ingenuity of your monster-killing populace.

Taxation — The Enemy of All Capitalism

Equiping, feeding, transporting, and entertaining troops is WHOMPING expensive! As the monster forces increase, so must the cost of combating them. This expensive endeavor not only justifies bureaucratically complex governments and a sizable military-industrial complex, it also requires a large and complex tax collection system (*cough* IRS *cough*) but also a large advertising campaign to keep the once-gold-rich population content with constant taxation.

Forget "Buy local!" … Buy Overseas!

You definitely don't want to harm your economy! So buy all your swords, armor, medical supplies, etc., from your neighbor! Ruin their economy! Exponential growth in monsters and consequently exponential growth in gold? Hah! Who cares if gold is worth pennies-to-the-ounce among your most hated enemy!

You're Famous!

Of course it's incredibly important that your people realize that their safety and security is a blessing from you and only you! Make sure they know this by having giant, beneficent STATUES made entirely out of GOLD in every city! Maybe even two! Put one at every crossroads! Then, of course, to protect your economy, you need to hire guards whose only duty is to be sure NOBODY defaces a statue!

The Bottomless Pit is Not a Legend

Finally, consider having the Bottomless Pit in your kingdom. Not only is it a great place to dump all those monster corpses (they stink, you know!) but it's a great place to offer sacrifices of gold to Glarnak! The sacrifices are, of course, mandatory and ensured by a large, well-paid police force.

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  • $\begingroup$ "The number of monsters grow exponentially" means that the number of monsters is multiplied by a certain constant k every year. To compensate for that, the amount of gold given by each monster should be divided by k every year; or equivalently, multiplied by 1/k. Hence the amount of gold per monster does not "decrease logarithmically"; it decreases exponentially. $\endgroup$
    – Stef
    Aug 10 '20 at 15:38
  • $\begingroup$ @Stef That's a geometric increase (constant over time), not an exponential increase (exponential over time). I took the OP at his/her word, and since the mathematical opposite of an exponential is a logarithm.... $\endgroup$ Aug 11 '20 at 16:42
  • $\begingroup$ The logarithm function is not the "mathematical opposite" of the exponential function; it is its "inverse function". See en.wikipedia.org/wiki/Inverse_function . "geometric" and "exponential" are almost interchangeable words. "Geometric" is used in discrete setting, and "exponential" in continuous setting. I.e., we talk about a geometric sequence but an exponential function. In contexts where the distinction between discrete and continuous doesn't matter, we usually say "exponential" rather than "geometric" although both would be technically correct. $\endgroup$
    – Stef
    Aug 12 '20 at 12:53
  • $\begingroup$ The distinction between discrete and continuous is often irrelevant when measuring progression over time; for instance, you could measure the number of monsters in the land once per year, and get a discrete sequence s of values giving the number s(y) of monsters on year y. Or you could measure the number of monsters "at every instant" and get a continuous function giving the number of monsters f(t) at every instant t. The distinction between these two theoretical measures is not important so we say the number of monsters increases exponentially over time. $\endgroup$
    – Stef
    Aug 12 '20 at 12:57
  • $\begingroup$ The point remains that in order for the total amount of gold to be constant over time, the amount of gold per monster needs to decrease exponentially, not "decrease logarithmically". In fact, the logarithmic function is increasing, not decreasing. $\endgroup$
    – Stef
    Aug 12 '20 at 13:27
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Most of you adventurers have not taken any classes in Monster anatomy, just hack slash their way to a win.

If they had they would discover that gold typicality is always found in the stomach of the monsters. They get there by eating less able villagers, adventurers, and other monsters. The monsters use them like gizzard stones in birds. The action of stones in the stomach helps grind and break up food, making digestion easier. The monsters will also happily eat copper and silver coins, but since they are less noble metals they slowly dissolve in the stomach acids.

So that is why monsters want to eat food (people) containing gold. That is why you don't get rapid inflation in the price of gold. Anyone who collects enough of it gets eaten, taking it out of the money supply.

Also gold is quite a lot more valuable than silver and copper and the ratio of gold coins to silver and copper is fixed, most people only trade in copper and occasionally silver and those coins are permanently being removed from circulation (by acid) so the two forces mostly cancel each other out.

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There is no gold in the sense you and I would mean. There is a metal. When that metal is near a monster, it converts into ever more pure gold. When that metal is farther away from a monster, it slowly turns to lead. The rate is low, but not zero.

So where do the monsters get the lead? Lead acetate is was a sweetener. Maybe monsters add it to their tea and coffee? Maybe it is a mineral distributed in the soils of their homeland. Maybe its dissolved in the waters of their homeland. (We'll put mineral and water together and just speak of water subsequently; but remember that the source could be either or both.) Whatever the source, it slowly accumulates in their biology. Of course, since it is then close to a monster, it starts to turn to gold. Perhaps this transmutation is some ancient adaptation to allow monsters to survive in this region having these poisonous waters. If this source of lead is exhausted, if the monsters are taken to new lands, or if illness or injury causes the monsters to stop absorbing and storing the lead, the amount of subsequent gold decreases.

I hear some smart guy is building a monster zoo with lead lined cages...

Why aren't we swimming in gold? First, there is only so much lead in the water at any one time. Second, the lead has to accumulate for a time to convert to gold; if the rate of "collection" increases, the mean gold per "target" decreases. Third, rich guys have learned that they can keep their treasuries sparkly if they keep monsters in the treasury; they're captured and kept in the treasury as guards and then their internal gold is collected when they die by other means. But these captured treasury guardsmonsters no longer have access to absorbable lead, so the amount of gold is pretty much fixed at the time of capture. So, there's just less free range gold for heroes to collect.

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1. You need a gold sink

Some way of getting gold out of the economy.

Video games have a very similar situation to yours and some of them such as RuneScape have created degradable items that must be repaired by NPCs at a high cost in gold coins as a partial solution to this issue.

A real-world analogy to a game developer would be a government. Hence my next point...

Progressive Taxation

From wikipedia:

A progressive tax is a tax in which the tax rate increases as the taxable amount increases.

Despite having an endless supply of gold available, monster slayers might stop the hunt when they can only keep 20% of the harvest and decide to go on vacation instead.

The king in power is a hoarder, and keeps all the taxed gold in a large chamber for him to gaze upon. The taxed gold is effectively taken out of the economy.

Loss at sea

The most profitable monsters live on islands far away, and your monster slayers have gotten greedy. As they fill the ships beyond capacity with gold to voyage back home, more and more of them start to sink to the bottom of the ocean.

Another possibility is loss at sea through trade. As one king becomes much richer than another far away that might not have as many monsters, he realizes that the purchasing power of gold in other kingdoms is much higher. An increase in sea travel leads to an increase in lost ships.

2. Limiting factors

You may also have ways of limiting the amount of gold that gets introduced to the economy. Some of these may be:

Lack of good monster slayers

Slaying dragons cannot necessarily be self-taught. And since it is such a profitable venture, the few who know how to do it do not want to waste their time teaching others.

Since very few experienced slayers want to take time off from slaying dragons to teach younger adventurers how to do it effectively, the majority who attempt to follow this career path are inexperienced and unsupported. They end up dying in the first few months to a year.

Even though there is a theoretically infinite amount of gold to be obtained, very few people are actively hunting for it.

People for Ethical Treatment of Monsters (PETM)

Activist groups rally and lobby against the senseless mass killings of monsters and your greed. They slow down your efforts.

Natural Resources Ministries

The king does not want its population to become wealthier than he is, and puts a limit on the amount of monsters each person may kill. A person may need to purchase a permit to hunt specific monsters and may have a limit on the amount that can be killed per year/season.

3. Economic reasons

This isn't my field of expertise and other answers cover the subject, but here's an idea:

Growing population

Even if the amount of gold in the economy increases, if the amount of gold each person has remains stable, the purchasing power of gold also remains stable.

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If the cost of killing a monster is equal to the value of the gold you can extract from it (including the killer’s profit, the cost of the killer’s training, any operating cost and adjusting for risk), the price of gold should remain relatively constant over time.

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It is a matter of perspective.

From a "player in a RPG" hero point of view, the monster apparitions increase, as does the difficulty involved in slaying them, and also, yes, the gold coins received. Still from a non-player character's point of view, a non-hero regular merchant/ soldier etc. roaming about, the monster situation is curiously the same. It is the hero who travels and searchers for more demanding /rewarding fights with increased gold wins but also expenses as his/her power grows.

So it is not that the monster numbers keep increasing since, well, forever -- there may be crises but also long periods of no monster activity at all -- but during crises, the hero is needed to travel and confront the appropriate leveled threat.

It is a given that you do not, as a god-tier hero, go on an expedition to eradicate, say, plague rats when farmers with pitchforks and leather vests are sufficient, nor are you suicidal as a beginner would-be hero to go and try to slay dragons when you're basically a courageous farmer.

More than that, if the fantasy world allows it, you might not be the only hero, or the mightiest yet, or in the best party possible, etc. There may be others that "play the same game" but at their own levels, carrying appropriate tasks. So no, the overall gold does not increase exponentially- you, as a hero, just happen to see stronger and stronger foes and are awarded more gold as you win- because you need to- maintain gear, feed party and self, buy new gear etc. And so does everybody else in the adventuring business. For you there might seem to be an increase in the number of monsters you fight and the gold you make (but also spend) but for everyone else there is just a fluctuation- after you drive out the dragon, lesser monsters will emerge, and lesser heroes will come to collect... and so on.

Moreover, the fact that you find gold on monsters can be thought to be only a hero's tally of the reward that the officials/hunters guild/adventurers guild/king/whoever sent you on the quest will pay you for slaying said monster (apart from intrinsic fur and bone value etc) - more like public safety benefit tax or something.

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Other items ALSO drop. Due to this, not only is there more gold every day, but also more of every other material. Trees respawn, chickens respawn, fish respawn, etc. Thus, the quantity of goods stays in balance with the quantity of gold. If for example in year x+1, 10% more gold is dropped than in year x, but also, 10% more wood, 10% more materials, 10% more fish, 10% more potions etc, then it should remain in balance. (This is often the case in MMOs as well, if fishing is super profitable, many players fish until it is no longer as profitable, then player move to other means, such as mining, woodcutting, hunting, potion making etc) In general, any product that is under- produced, ends up becoming more profitable, and this brings more producers back to that skill or profession.

Interestingly- deflation is even possible. As people approach the limit of monster slaying rate (determined by instantly killing a monster on respawn) the gold entering the economy hits a hard cap, and if other resources, like respawning trees, are more plentiful, then the ratio of gold to wood would mean that gold would deflate.

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  • $\begingroup$ Thank you for your insight and welcome to the forum! This answer shows a lot of thought, however I believe the OP was trying to avoid deflation as the “trading value of gold remains constant.” Thanks for the contribution! $\endgroup$
    – Vogon Poet
    Aug 11 '20 at 16:14
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I will not provide you with a direct solution but help you formalize this problem. Your world is creating a constant stream of new gold pieces (gp). This is called a source, in your case is monster-slaying but it could be anything else. In order to have your money to not devaluate, not inflate you need a sink which is what most answer here propose. a sink is a way to make money disappear. thus the net balance of money is set such as it neither win or loss values. You can have several sinks.

you want something on the line Source + Sink = a little more than 0. To compensate from the variation of your economy and your population. as additional Sink that those already proposed here:

  • God demand gold sacrifice the GP is disposed on the alter and disappear with pyrotechnic effect in the god plane.
  • some magic stuff or spell consume gp when use or cast.

In addition to sink your money could be artificially set to match a rare resource, like adamantium. (We used a gold equivalent not so long ago). example 1000gp is worth a gramme of adamantium. Which will prevent it from changing to much if the absolute adamantium value does not change.

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Trade with a distant empire drains gold from the system.

During antiquity, Europe, North Africa and the near east had an ongoing problem with gold and silver being drained from the economy by the silk trade and other eastern-oriented trade. They produced few goods that could be exported profitably to India and China and as a result continually sent precious metals east in exchange for goods.

Your economy works fine if there is another part of your world that lacks gold-spawning monsters but produces goods that are in high demand. Excess gold will continually leak from the local economy to the import economy.

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  • $\begingroup$ Reverse mercantilism: when imports are prioritized and inflation is someone else's problem. $\endgroup$
    – Beefster
    Aug 11 '20 at 16:15
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In our world, gold is not actually used up. Whereas in magic world, certain powerful magical processes - such as those granting longer life or prolonged youthfulness in particular -- use up gold at prodigious rates. Therefore, like oil in our world, a steady and rising production is needed to avoid a shortage.

If no more gold was forthcoming supplies would be used up rapidly and alchemists would need to find an alternative source such as transmuting lead.

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Two options exist in the real world:

  1. Gold is perishable so it has a limited useful life. Either it turns to lead (or straw - as happens in alchemy) after time if not spent, or it possibly is radioactive and decays. In the end the amount of gold in circulation is constant.
  2. The world is not a free market So prices are fixed by a feudal government. All goods and property are owned by the feudal lord (which is actually true even in capitalist societies, through eminent domain). This means that the weapon smith is simply not allowed to set his own prices based on demand. We see this happening today under the pandemic. People could almost charge whatever they want for a face mask because everyone needs one, even thought they are incredibly cheap and easy to make. The government prevents price gouging for vital goods. Hotel rooms in hurricanes are another example. So in your world full of monsters, if you don’t have a sword, you die. A sword is a vital commodity, therefore the government mandates a price cap on these essential goods. The price can’t change. Same goes for wood to build your shelters, groceries and food items, armor, etc.
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The Ruling Class is taking the gold out of circulation

The sensible government is well aware that if the price of gold collapsed, their society's ability to control the monster population would also collapse, along with their whole economy. The skilled monster hunters would go broke and leave, dooming the kingdom to increasing levels of monster attacks.

So, they heavily tax everyone except the monster hunters and then secretly dispose of excess gold somehow. By doing this they maintain a system that is just managing to keep monster populations stable, or is even gradually reducing them.

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When humans die all the gold they own disappears.

When a monster dies it produces gold.

When a human dies All the gold they own disappears with them.

Once people realize this happens they will take measures to mitigate it but some losses will always occur. Then net amount of gold will still increase but there will always be a drain of gold being lost as well. this will allow the economy to growth without getting rampant inflation. It also give some control of the gold supply, need more gold kill some monsters. Even better it self regulates inflation If people start hoarding or the value of gold drops, more gold is lost when people die (because they have more) so inflation can't get to out of hand.

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Evolution favours non-gold-producing animals

Consider elephants and ivory.

When killing an elephant took a great effort, you would generally have to wait for them to die naturally. As a result, ivory from elephant tusks was highly valuable and rare. Ivory from other species (whale and walrus tusks, for instance) was mainly used instead. When Europeans arrived with guns, killing an elephant now took relatively little effort. Elephants were slaughtered en masse for their tusks. Elephant tusk ivory remained (and remains) rather valuable, but it became less rare.

With large-tusked elephants being killed for ivory though, this imposed an evolutionary pressure on elephants. African elephants in some areas now have smaller tusks, or may be entirely tuskless. If or when poaching becomes less of a risk for elephants, we will discover whether these elephants revert to having tusks (given the evolutionary advantages in competition for a mate) or whether they become the start of a distinct new sub-species of elephant.

In the case of your monsters, the amount of gold within each monster may be something that "heroes" can work out, because you don't want to risk your life trying to kill a monster for no reward. Gold is relatively heavy, so it seems likely that it would affect how the monster moves, or there may be other visible characteristics which could be picked up. "Heroes" would attack gold-bearing monsters, but leave monsters alone which they knew would give no reward.

With gold-bearing monsters being preferentially killed, it is not just likely but inevitable through evolution that surviving monsters would develop so as to not store gold. This might otherwise be a genetic fault which has disadvantages for the monster - perhaps it would make their digestive system less efficient at processing food, for instance - but as with elephants and their tusks, this would be vastly outweighed by the advantage of actually surviving long enough to reproduce.

Which is morally correct, of course. If you kill the goose that lays the golden eggs, you shouldn't assume you'll just be able to find another similar goose.

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The gold coins would need to plausibly generate from the living body of every monster, then only being available for extraction in the corpse of the creature. This means that these coins must be organic in some sense. Perhaps the heart or brain of the monsters naturally produces a small quantity of gold throughout the monster's lifetime. This raw, unrefined gold ore would then be present in the monster's veins and arteries or alternatively, the monster's hemocoel if it has an open circulatory system. The gold would then need to be prevented from being expelled in some way, such as the monster possessing an excretory system that only eliminates lighter elements, leaving the gold behind. Based on the monster's anatomy, the gold could collect in some vacuous, space and naturally conform to a coinlike shape over time. The only way I can see to maintain the value of gold present in the economy is to have these partially organic coins decay eventually, possibly leaving behind a subtle gold residue which for some reason is of negligible value, perhaps because gold is extremely common in the environment of this fantasy setting.

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Just have the AMG (Average amount of Monster Gold) be like Minimum Wage is in the US. When the Minimum Wage goes up, corporations assume that since people are (theoretically) getting more money, their products should cost more so they get more money themselves.

In other words, as monsters become easier to slay and the number of gold coins increases, there is an equivalent increase in the cost of goods. The price of gold will therefore be constant relative to the goods it is used to purchase, even though there is more gold coins.

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