The problem is that NPC don’t spend the money you give them. After a while, the NPC will hoard all the wealth and players will be left with nothing. If there is a way for NPC to spend the money, you will have a circular economy.

Replies (2)

Honestly they could just make gold spent at NPCs available for drops in the game again. Still can imagine problems, since NPCs don't adjust prices based on the scarcity of the currency.