Wizard Economics

[tex23236]

No: HPFGUIDX 33639

--- In HPforGrownups at y..., "judyserenity" <judyshapiro at e...>
wrote: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.
> 
Right, never thought of that. Wizards sans robes seem to look like 
normal people, so, it wouldn't be a problem. Probably even a Goblin
would "pass," if he were buying gold.

Judy also said:
> 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. 

IOW, it's not cannon.  OTOH, the Grangers exchanged Muggle money
for goods and services in the wizard world, so their money doesn't 
leave the wizard world.  Then Gringotts buys more gold with the 
Muggle money.  So, the wizard world is accumulating gold, making
it "cheaper" in real purchasing power. That, plus Flamel's production
Judy mentions below. Argh, so now we have the wizard world 
overflowing with precious metals!  They need to buy something else
from the Muggles.  My guess is that they buy some foodstuffs and 
other items from Muggle markets--probably not produce,  with the
engorgement charm Hagrid (illegally) uses on his pumpkins; but 
dry goods and, possibly, meat.

10 Galleons might be the "standard" price for a wand, from whatever
it was made. We also read that Fawkes "gave" the feather, so maybe
the cost of the core doesn't enter into the cost of producing a wand.
> 
> 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
Gold and more Gold! A Kruegerand might well be worth US$7 in the
wizard world. OTOH, might it be possible that precious metals are 
consumed in the use of magic?

Tex