Every so often, someone complains about high auction house prices (i.e. 60K for a common salvage). Goldfarmers are brought up. Someone else tsks, pointing out it's wrong to simply blame the influence sellers when there's other reasons for high prices (like supply being lowered by more players being in AE where there's no drops, then coming out of AE and wanting to buy IOs). Discussion tends to peter out at that point.
Thing is, high auction prices aren't the problem. They're a symptom of a monetary system gone bonkers. Any fix aimed just at the auction system may alleviate the problems there, but it won't solve the underlying problem, and if store prices weren't fixed1 we'd have Weimar-style hyperinflation now. And goldfarming is almost definitely to blame for this.
Executive summary (aka "tl;dr"): the City of Heroes economy is built on the assumption that it's a closed system, so any entropic effects are balanced against a few known internal exploits. But it's possible to create a "partition" of sorts and put active players in a non-closed system that will slowly destabilize as funds are pumped into it from the other side of the partition.
Okay, here's some points I think everyone can agree on. In the Old Days (pre-salvage), I'm told it was incredibly hard to get fully slotted up with Single Origin enhancements. The reason you can buy L50 Training Origins at a few stores is simply because players often had to use them because they ran out of Inf before filling out their slots. While there were certainly a few hardy souls who managed to hit the Inf cap back then, they were the exception rather than the rule as far as I can tell (although the few I've heard from seem to think it was easy and that everyone else should have been able to do it too).
Nowadays, though, it's trivially easy to stay fully slotted up with SOs once you've been around long enough to get a few lucky salvage drops. I have three characters that come to mind off the top of my head who have over 100M Inf, and I think I may have one or two others. Even when I had trouble keeping my high level toons in Inf prior to the @mail change, that was simply because I couldn't get the money from my rich characters on Server A to my poor ones on Server B...not because I lacked the Inf in general. And now that I can freely move stuff around, any of my characters can max out on anything available from stores that I want. And this is all from selling a handful of purple recipes (and a couple of in-demand orange ones) that I had no use for back before I could easily send them to toons that could use 'em.
So, we've gone from veteran players having to scrimp and save to maybe be all DO's at L50, to a relative newbie (I made my first 100M+ sale at around the 7 month mark) being embarrassingly flush with cash without even trying hard. And I'm hardly alone, I regularly see people sneer at L50 SOs these days, when it used to be a major accomplishment to have a full set of them. The difference in wealth may be a bit of an "in my day we walked uphill both ways" exaggeration, but the auction house prices speak to the fact that there's definitely more Inf floating around than there used to be...it doesn't matter how tight supply is, prices can't rise above the limit of the available money. So where is all the influence coming from?
It's not coming from the Auction House. That system does not create Inf, in fact it destroys Inf. A few percent of every transaction just vanishes, a built-in financial entropy that was probably calibrated initially to counter some of the increased wealth that asymmetric trading2 creates. Without the fee, asymmetric trading might slowly create wealth out of thin air, but it does so based on the difference between the auction price of undesirable items and their store price, not the difference between high-sellers and the store price. At best, the auction system is likely influence-neutral at best, and given the incentives for just dumping crap for 5 Inf (badges, increased inventory size, etc.) there's less asymmetric trading then there could be.
When you come down to it, all Influence comes from player efforts. You get influence for defeats and mission bonuses, you get salvage and enhancement drops that can be sold to the store to create direct wealth out of the game (selling them to another player directly keeps the total money supply constant, selling via AH lowers the overall money supply).
Introducing the salvage/auction system likely increased the rate at which players generate wealth. And there may have been a few tweaks here and there to increase the rate as well, since NCSoft isn't as big on the Work Ethic as Cryptic. But I doubt that the average rate has increased to the point where it's trivial to have enough by the 40s to stay topped off with SOs. It's still a possibility, mind you, but I doubt things have changed that much.
No, since all wealth in the game comes from player efforts, if the payoff rate isn't dramatically higher (either in Inf/hour or hours played per player), then the other obvious way to increase the amount of money in player hands is if a significant number of players are earning Inf and then not spending it in-game. Remember, even if it just gets spent back and forth in the Auction House to move salvage and recipes around (i.e. you buy my Detonation for 40M, I use that to buy some Calibrated Accuracies from Fred, he uses the money to buy Blood Mandates, etc) the amount doesn't increase. It decreases due to auction fees.
Quick aside to define a few things. Let's call "real average wealth" the total influence held by active characters in the game divided by the number of players (not characters...the player is the "earning unit" even allowing for dual boxing in a few cases). And "effective average wealth" is the total influence in the game held by active characters divided by the number of players who are spending it on things. We will ignore influence sitting in accounts that are disused, or on characters who aren't being played and whose bank accounts haven't been siphoned away through @mail.
Real total wealth in the game is roughly equal to the average earnings-from-drops per player-hour (wealth from direct influence rewards, plus the store values of any salvage, recipes and enhancements) times the number of hours played, minus all influence spent in stores on TOs, DOs, SOs, Inspirations, and the like. Money comes from drops, it goes into the store. In a closed system, real total wealth will be pretty low, since most Inf will be spent on stuff. Some gets shifted off of characters who are then deleted, some gets given away in costume contests and riddles, but so long as in-game money can only be traded for in-game things, real average wealth will hold pretty steady as a measure of the extent to which players are willing to not have all their characters fully slotted up.
Real average wealth will likewise be fairly low, but not zero. Even in a properly closed system, some players don't want to mess with lower level enhancements, so will earn Inf that is not spent, bringing up the average. Plus deleted characters can be raided for whatever Inf they had left, which will slowly bring up the average. But that will be countered by Inf "sequestered" in characters that are simply abandoned, or accounts that go inactive.
However, if a significant chunk of the player base never spends Inf on in-game stuff, then effective average wealth can rise quickly. And I'm not talking about people who stay in AE all the time, using tickets to buy enhancements and then spending all their Inf at the auction house. Tickets are a kind of salvage, and while the earning rate can be gamed, it's still a part of the currency system. Similarly, while costume contests, riddles and outright gifts increase effective average wealth, it's not like every server has CCs running 24/7.
No, I'm talking about "goldfarmers". Influence peddlers, Infamy brokers, whatever you want to call them. Goldfarmers trade in-game money for real money. So they create wealth that doesn't then go back into the bank. The system is no longer closed, players create effective average wealth by pumping dollars (or Euros, etc) into the system. Characters are created and run up to L50 without spending anything they earn (at most they spend a little on inspirations, or a few really important enhancements). An entire group of players is created that earns but does not spend, so their money remains in the system rather than being recycled back to the bank.
It doesn't take a lot of goldfarmers to upset the apple cart, just one firm (GAGORA.co) over the course of a few years will slowly increase effective average wealth to the point where pretty much anyone who uses the auction system can get millions of Inf very easily. Of course, the arms race is on, and the people paying real money for Inf have to buy even more to continue winning their auctions, since all the money they pump into the system via goldfarmers leads to inflation. It's possible I never sold a single thing to an Inf-buyer through Wentworth's, despite getting hundreds of millions...I might have sold to fifth-generation trickle-down beneficiaries of an initial "I'll drop ten bucks on a billion influence and buy that Armageddon right now" player.
Buying game currency from third parties is a violation of the user agreement. But enough people ignore this that we've slowly increased the amount of Inf floating around over the years, and now the non-fixed parts of the economy are broken. There's really no way to fix it without engendering massive player ill-will, though (how would you react if you found that the influence cap was dropped to 100M, or the system was simply reset from zero?) or simply ruining the economy entirely (which price capping the auction house might do), so I guess we're stuck shaking our fists at the goldfarmers and those who buy from them and getting used to the idea that if we want to craft things we'd better find the salvage and recipes ourselves. On the plus side, sell a few in-demand common salvage drops at L5 and you're set for TOs and DOs. Find and auction a single purple recipe and you can keep a dozen characters fully slotted up with SOs.
1. In a real economy, price controls would lead to even worse collapse. But the stores never run out of anything they carry. There's advantages to buying from and selling to particular stores in different zones, and some wealth can be generated or destroyed that way, but it's a pretty small effect overall. For the most part anything that can be bought from a vendor is just another form of Influence in City of Heroes. Prices never go up just because people are buying a lot of Shields of Joule.
2. In asymmetric trading, you only put something on the Auction system if you're pretty sure it'll go for more than the store price (250 for Common, 1000 for Uncommon, 5000 for Rare). If it's not performing better than that, you sell it to the store or hold onto it. But anything you auction takes money from another player, rather than from the "bank", so it doesn't put money into play. Only the sales back to the store put more money in play.