>>422484
>congratulations you found 1,000 gold in the goblin's lair but its all goblin gold which is really lumpy and impure gold. In reality its worth more like 100 gold
This would be an incredibly unrealistic exchange rate, especially if we're talking about medieval cases. When talking medieval coins, minted coins should hover close to the price of bullion when talking about direct weight (of course, gold coins should also be quite rare, but that's a different story altogether) - hell, as a matter of fact, a recurring problem in many states was that coins would depreciate in value, leaving them worth less than bullion; when this would happen, the coins would find themselves melted down, refluxing to bullion as people found themselves using the coins less and less, and in some cases using foreign currencies. That being said - 1000 gold coins should be worth very close to 1000 gold coins, unless the coins themselves are actually smaller, or - touching on purity - aren't actually 100% gold. In terms of exchange rates, the suggestion given in the AD&D DMG is to have money changers required for purchases in foreign lands, with about a 3% service fee charged in the process. While you could have direct exchange rates for different coins, I would generally consider this a step too far, and just go with the small percentage. But if you're going to get into it, then go all the way, and set up a spreadsheet for it.
And as for goblin con, "goblin gold" in the Lord Dunsanay sense should be more valuable; in the modern "cannon fodder goblin" sense, it should just be stolen.
>what would happen if you injected a massive amount of money into an economy only for a curse to make it all disappear? Obviously a depression but which would be worse? the rampant inflation or the depression from it all vanishing?
For these purposes, I'll assume that by "money" you're talking about metal-based money which is not directly convertible with the local currency but which is nevertheless in a coin-like format, and not paper currency; that the local currency is metal-based; that the "massive amount" is say 25% of the total bullion in the state; that there is a free flow of trade between the state and the surrounding areas; and that it takes perhaps six months for the money to vanish.
Assuming the economy was more or less functioning without any major issues prior to the injection of gold, the amount of coin in circulation should be approximately equal to that demanded for trade to function properly. If we inject a massive amount of what is effectively foreign trade, then we shouldn't see a huge amount of inflation - rather, the new coins will lower the value of bullion relative to issued coins (appreciation); some of the new coins will be repurposed by the crown, increasing the amount of money in circulation; others will end up in vaults; and others will wind up as bullion, and sold off to foreign states. The state itself will experience an increase in wealth, and should - unless poorly run - experience little in the way of negative effects of inflation.
Now the curse comes in, and the metal all goes away. From the above - a lot of people in the neighboring countries suddenly find themselves poorer. You've already correctly diagnosed what happens in the local state - there's a sudden drop in the amount of metal demanded (though note that this is not a 1:1 ratio) and the amount of currency in circulation is insufficient for the present demands of the population. The result will be a depression. Some possible results:
1) The state does fuck all. Currency from neighboring states begins to enter into circulation, further weakening the trust in the local currency. Should the neighboring state press the advantage, the domestic government may find its coin effectively deemed worthless, and find itself forced to push for draconian laws and punishments against those using foreign currency to maintain its own power.
2) The state take out loans from money lenders to begin issuing out large amounts of money, and then drive the money lenders out of the country at a later date when they come to collect the bill.
3) The state releases an injection of paper currency, backed perhaps with land, or perhaps by the release of IOUs. This will relieve the problem almost entirely and is the most efficient, but will also lead to a second depression in the future if tight money wins out in the future, and inflation if easy money is too strong. If the state is in a particularly desperate position, it might issue out more of these to pay for a war against a neighbor, than take all of their gold/silver to pay off bits of both.
4) The king trades a random Flaming Sword in his treasure vault for a Luck Blade +1 and uses a wish spell to undo the effects of curse.
If there's anything else, I'll be back when I'm sober.