Wizard Economics

[judyserenity]

No: HPFGUIDX 33628

broken at p wrote:
>> I can't imagine that places like 
>> London house a "wizard underground" network, where wizard 
>> dentists only attend wizard patients, et cetera, but within the 
>> city of London...
>> What, exactly, does [Lucius Malfoy] do? 

Well, I'd say Diagon Alley and Knockturn Alley are, in fact, 
underground wizard areas within London.  We don't see any dentists or 
architects there, but perhaps those alleys are just the shopping 
district, and the professional offices are on another street.  The 
Ministry of Magic has offices somewhere in London; perhaps there is a 
large wizard office district hidden away someplace. 

As for Lucius Malfoy, I've assumed he inherited his money, and spends 
his time counting the return on his investments. 
 
Tex23236 said, in regards to changing Muggle money at Gringotts':
> This means that the Muggle world has something the wizards want to
> buy with the Muggle money, i.e. there is trade with the Muggles; or 
> else Gringotts would be choking in "useless" Muggle money...

Well, wizard money seems to be actual metal -- gold, silver, bronze.  
So, presumably, muggle money is used to buy gold and other metals; 
that's how it gets exchanged into wizard money.  Perhaps the 
Gringotts' goblins employ a "normal looking" witch or wizard to buy 
gold for them; we know they employ humans such as Bill Weasley.

There does seem to be a problem with the exchange rate that JKR has 
mentioned in interviews. (I think it was about $7 per galleon.)  The 
amount of gold per galleon is too small for a useful coin. Gold has 
been trading at around $280 an ounce and there are 31 grams in a ounce 
of gold (believe it or not), so gold is about $9 a gram currently. 
Gold is very dense and a gram of gold is tiny; 7/9th of a gram would 
be a teensy coin. Also, things seem awfully cheap in the wizarding 
world. Harry's wand cost 10 galleons. $70 for a vital tool like a 
wand, with a rare item inside such as a phoenix feather? That's less 
than half the cost of a single night in a decent Muggle hotel in 
London.  However, the exchange rate hasn't been mentioned in the 
books, so we can ignore the interviews and assume a higher value per 
galleon. 

Tex23236 also said:
> ...Hogwarts definitely has quite a large bank account somewhere.
> Probably a large endowment.

Someone pointed out earlier on this list that Nicholas Flamel had 
unlimited access to gold, due to his Philospher's Stone.  Given his 
friendship with Dumbledore, he could have provided Hogwarts with a 
very large endowment.  And, given that Flamel had the Stone for 
centuries, he could have endowed Hogwarts a long time ago.  It 
wouldn't have really cost him anything, after all. 

-- Judy