Why don't the Westerlands succumb to rampant inflation?

[Alyn Oakenfist]

From what we know at this point the main economic engine of the Westerlands are the gold mines. The problem is when your economy survives by printing money (or in this case digging it out of the ground) you tend to have massive inflation problems. So why isn't this the case? The problem seems especially bad given that for millennia the Westerlands were an independent kingdom with nowhere to dump the gold (at least now they can get it out of their hands by giving it to the crown).

[John Suburbs]

27 minutes ago, Alyn Oakenfist said:

From what we know at this point the main economic engine of the Westerlands are the gold mines. The problem is when your economy survives by printing money (or in this case digging it out of the ground) you tend to have massive inflation problems. So why isn't this the case? The problem seems especially bad given that for millennia the Westerlands were an independent kingdom with nowhere to dump the gold (at least now they can get it out of their hands by giving it to the crown).

Well, we don't know that there aren't higher costs in the westerlands than anywhere else. Lannisport is kind of off the beaten path as far as trade routes go, and they don't seem to have a highly prized commodity like Arbor Gold, so it's likely that traders make that run because they can get a worthwhile price for their goods.

And it's not like Tywin digs the gold out of the ground, smelts it into coins and then hands it out to the smallfolk. There would have been just as much, if not more, trading taking place between the 7 independent kingdoms than there is between the 7 great houses after the conquest.

[The Jingo]

6 hours ago, John Suburbs said:

And it's not like Tywin digs the gold out of the ground, smelts it into coins and then hands it out to the smallfolk. There would have been just as much, if not more, trading taking place between the 7 independent kingdoms than there is between the 7 great houses after the conquest.

This.

Economically the Westerlands produce precious metals like gold and silver, but there's also fishing and farming. I would also presume that the land is not mineral rich solely in gold and silver, but perhaps other metals as well.

Regardless, the Westerland houses probably just put their gold and silver directly into vaults while taking in tax revenue from other conventional sources like the other regions do.

Inflation is the West is probably higher than in the rest of the kingdom, but unless the noble houses there are spending it all as soon as it rolls in then they're presumably exercising some level of market control and just stockpiling.

[Walda]

Tywin's tight monetary policy. He removed a number of rights and protections from the smallfolk, and increased the trading monoploies of the noblest families - the ones that were leal to him and heeded his counsels. He also owned most of the gold and set the terms of its exchange.

So he was able to prevent wage inflation and limit price inflation and keep the Westerlands in artificial recession.

In real life, slavery and serfdom kept inflation at less than 1% p.a for more than 400 years. Also, while planned economies have their faults, it was no accident that the 1930 recession hit capitalist countries hard but missed communist countries altogether. 

Boom and bust is an inevitable consequence of a laissez-faire capitalism.

In a situation of feudal serfdom, where 99% of the population are rural labours who rarely have as much as a single silver coin at their disposal, and are tightly regulated and controlled by their landlord (who also collects excise and can set or refuse to set tarrifs on all goods traded through Lannispot, and is also both Hand of the King and Warden of the West - no separation of powers here) there is no great demand for gold because most of the would-be buyers have only what they subsist on after Tywin takes his cut. Hence, no demand.

In real life, if you compare the economy of the slave-owning confederate south with the capitalism of the north, you can see the antebellum South is enormously wealthy, in terms of GDP but the wealth was mainly concentrated into the hands of a few dozen industrial planters, the majority of the population were unpaid and unskilled or poorly paid and semiskilled, and there was minimal public infrastructure. And the economy revolved around cotton/ raw materials exported to Britain/Europe. So once the North had successfully blockaded their ports, their economy collapsed.

The north had 3/4's of all the factories in the USA, and of all the workers in the USA. Those workers were skilled, could lawfully move to better opportunities and pay and develop more specialist skills, and had the money to spend on their own homes and land and furnishings and geegaws and entertainment.

Serfdom doesn't just oppress people, it suppresses economies. Also, planned economies don't follow the rules of free market economies.

[Rondo]

On 1/17/2020 at 2:28 PM, Alyn Oakenfist said:

From what we know at this point the main economic engine of the Westerlands are the gold mines. The problem is when your economy survives by printing money (or in this case digging it out of the ground) you tend to have massive inflation problems. So why isn't this the case? The problem seems especially bad given that for millennia the Westerlands were an independent kingdom with nowhere to dump the gold (at least now they can get it out of their hands by giving it to the crown).

Mining and production of the time were slow and laborious.  Tywin didn't have the luxury of free and expendable labor as he would have if he were in Essos.  It's not like he was producing pounds of the stuff daily.  In other words, the gold entering the market is a trickle rather than a flood.