The real problem I have with your arguments, such as they are, is their internal inconsistency. It is clear you are grasping at straws, ignoring a large number of obvious data points to justify a frankly silly conclusion.
Atvits core, there are two things currency requires - it needs some kind of backing and it needs legitimacy. You are wrong in your statements on the former and inconsistent on your statements in the latter.
I will start with your factual misunderstanding of the first point, since your being demonstrably wrong in this regard seems to be your fundamental problem. In your first post, and in subsequent posts, you harp on the price of materials and how that should determine cost or you believe that the usage of steel as a fiat must be tied to another material, like gold.
This, of course, is just wrong. While coinage sometimes has historically represented its weight, and sometimes has stood as a substitute for gold in reserves, fiat coinage need not be tied to anything material. We know this is true because it is literally how the modern world works - coinage has not been tied to materials for decades; it is backed not by material but by the word of the government as to its value. And this is not a new concept - there are historical examples of fiat money backed only by the government’s word for thousands of years.
Thus, your trying to tie steel coinage to material wealth is without any real merit. It is easy to imagine that the coinage in Dragonlance is fiat currency backed by the issuance. Accordingly, one can easily write off all of your arguments on the value of steel - no matter how much steel it contains, that longsword is not backed by government decree, so the comparable weight of metal is irrelevant.
The second issue is one of legitimacy, which you have been hypocritical on. You seem to both argue that players can convert something like iron coins or a longsword into currency, and therefore the currency does not make sense. But, as already set forth, it is not hard to come up with imaginings on how coinage could be hard to create. Thus, even if players do try to do so, all they’re creating is something similar, but, without being an exact copy, does not get the metaphysical value ascribed by government-backed fiat coinage. Thus, it is not particularly hard to discard this argument with in-lore reasons (without even getting into the issues of the rules).
With how utterly easy it is to come up with ways to dispose of all your complaints, all of which are based in history, this really feels like a problem born of misunderstanding of how currency systems work. With a little more understanding and a little bit of critical thinking, it is quite easy to figure out how a steel coinage economy could work and thrive.
Now, is it what I would use? No. But this is a culture where steel was culturally important, and precious metals were explicitly frowned upon. If random folks on the internet can figure out the answers to your perceived problems in a matter of seconds, I am sure an entire culture with magic, metallurgy experts, and entire teams of governmental officials dedicated to solving these trumped up problems could.
The coins could also be similar to current pennies with a different material inside (dragon skin?).
The coins could be enchanted similar to the ones in Master of the 6th Magic.
But like others said, it doesn't matter. Not at all.
Neat ideas, but that actually proves my case — you’re inventing fixes because the published system doesn’t work on its own. Blank slugs, dragon skin cores, enchantments… all fine as house rules. But that’s not what the books give us. What they give us is “steel coins,” and taken at face value, that collapses under the most basic economic logic.
I’m not saying it can’t be fixed — I’ve already retconned it cleanly in my own games as silver-plated gold coins people just call steel. What I’m saying is that pretending “it doesn’t matter” doesn’t cut it. If the economy can’t pass the simplest suspension of disbelief test, players who think even a little about the world are going to bump hard into it. That’s not flavor, that’s a design flaw. This is why I brought it up it is so flawed suspension of disbelief tests one will to play, it a lingering sliver of thought that unravels logic. It would be similar to playing a game for you where the GM said everyone fights upside down. Because, i donno, i thought it was interesting, this is how the world works. Then players have to decide if the logic causes them less enjoyment because your disbelief is directly challenged. This is what makes some movies that make no sense, hard to watch.
I’m not saying it can’t be fixed — I’ve already retconned it cleanly in my own games as silver-plated gold coins people just call steel. What I’m saying is that pretending “it doesn’t matter” doesn’t cut it. If the economy can’t pass the simplest suspension of disbelief test, players who think even a little about the world are going to bump hard into it.
You know what else can't pass the simplest suspension of disbelief test? Dungeons.
The real problem I have with your arguments, such as they are, is their internal inconsistency
Fiat doesn’t save it. Fiat still needs legitimacy, and legitimacy only works if players accept the premise. The books never say “fiat,” they say “steel.” Steel is a raw material with obvious industrial use, which makes it the worst possible candidate for fiat currency. If the only way to defend it is “just imagine fiat,” then you’ve admitted the system as written fails.
I should be clear: I’m analyzing the core material as written, not your retcon. I have already indicated what retcon I prefer to solve this. Your claim of inconsistency only works if I accept your fiat framing, but that’s your patch, not what the books give us. My critique is of Dragonlance’s system itself, and by its own rules, it collapses.
The real problem I have with your arguments, such as they are, is their internal inconsistency
Fiat doesn’t save it. Fiat still needs legitimacy, and legitimacy only works if players accept the premise. The books never say “fiat,” they say “steel.” Steel is a raw material with obvious industrial use, which makes it the worst possible candidate for fiat currency. If the only way to defend it is “just imagine fiat,” then you’ve admitted the system as written fails.
I should be clear: I’m analyzing the core material as written, not your retcon. I have already indicated what retcon I prefer to solve this. Your claim of inconsistency only works if I accept your fiat framing, but that’s your patch, not what the books give us. My critique is of Dragonlance’s system itself, and by its own rules, it collapses.
The minutia of how the currency system works are not relevant to the story and therefore only a bad author would include them. This is the same reason character bathroom breaks are not mentioned unless necessary to the plot. Particularly since the US had been moving away from the gold standard since FDR, nearly a half century before the first book was published, the authors could pretty safely assume most readers would be able to apply basic common sense and basic knowledge of currency.
They were right to exclude unnecessary details and leave it to the reader to apply common sense - the books would have suffered had they instead catered to your fixation on this complete non-issue.
The minutia of how the currency system works are not relevant to the story and therefore only a bad author would include them. This is the same reason character bathroom breaks are not mentioned unless necessary to the plot. Particularly since the US had been moving away from the gold standard since FDR, the authors could pretty safely assume most readers would be able to apply basic common sense and basic knowledge of currency.
They were right to exclude unnecessary details and leave it to the reader to apply common sense - the books would have suffered had they instead catered to your fixation on this complete non-issue.
That argument cuts both ways. If it’s such a non-issue, it shouldn’t break suspension of disbelief the moment anyone looks at it. Bathroom breaks don’t wreck a setting, but an economy that collapses under its own rules does.
Funny thing — D&D actually has made “bathroom breaks” part of play. Early modules like Tomb of Horrors and Expedition to the Barrier Peaks had latrines, waste pits, and even monsters hiding in them (otyughs, carrion crawlers, brown mold, etc.). The 1e DMG literally has rules for disease and parasites. When going to the bathroom introduced danger, it became relevant to the story. So this is where new players are at, forgetting the past? Use of this example is very appropriate, unwittingly.
Good old brown mold, 5e has destroyed your brown roots, but I still remember you when i go to the washroom. Oh, how the mighty have fallen.
The minutia of how the currency system works are not relevant to the story and therefore only a bad author would include them. This is the same reason character bathroom breaks are not mentioned unless necessary to the plot. Particularly since the US had been moving away from the gold standard since FDR, nearly a half century before the first book was published, the authors could pretty safely assume most readers would be able to apply basic common sense and basic knowledge of currency.
When you give currency a bullion-type name, it's reasonable to assume it's bullion currency. Fiat currency generally has a specific name based on the issuer. Most likely the authors themselves lacked basic knowledge of currency and they picked steel coins because it was a way to sound cool and different. Of course, the entire D&D money system has always been nonsense -- no-one historically used four different bullion metals for their currency, at most you'd see two (gold and silver, averaging at about a 40:1 exchange ratio), maybe with some base metal fiat coinage (e.g. pennies and nickels in the US) that didn't derive its value from its precious metal content, it was just for convenience because a precious metal coin with the right content would be impractically small (the dime, quarter, half-dollar, and (old) silver dollar all have weight proportional to their value; imagine trying to deal with coin a tenth the size of a dime).
The problem with fiat currency is that it requires a strong government to guarantee its value. In the post-Cataclysm era (which is when Dragonlance was said to have switched from gold to steel currency) there's a distinct lack of strong central governments to enforce such edicts.
But really, that's the least of the setting's issues: it's got to deal with kender, a continent that's too small for the number of different sapient species living on it, the authors' weird views on morality (the Cataclysm came about because the world was shifting too strongly towards Good on the Good/Evil alignment, so the good-aligned deities dropped an asteroid on it, killing countless innocent people), and kender.
Rollback Post to RevisionRollBack
Find your own truth, choose your enemies carefully, and never deal with a dragon.
"Canon" is what's factual to D&D lore. "Cannon" is what you're going to be shot with if you keep getting the word wrong.
The minutia of how the currency system works are not relevant to the story and therefore only a bad author would include them. This is the same reason character bathroom breaks are not mentioned unless necessary to the plot. Particularly since the US had been moving away from the gold standard since FDR, nearly a half century before the first book was published, the authors could pretty safely assume most readers would be able to apply basic common sense and basic knowledge of currency.
When you give currency a bullion-type name, it's reasonable to assume it's bullion currency. Fiat currency generally has a specific name based on the issuer. Most likely the authors themselves lacked basic knowledge of currency and they picked steel coins because it was a way to sound cool and different. Of course, the entire D&D money system has always been nonsense -- no-one historically used four different bullion metals for their currency, at most you'd see two (gold and silver, averaging at about a 40:1 exchange ratio), maybe with some base metal fiat coinage (e.g. pennies and nickels in the US) that didn't derive its value from its precious metal content, it was just for convenience because a precious metal coin with the right content would be impractically small (the dime, quarter, half-dollar, and (old) silver dollar all have weight proportional to their value; imagine trying to deal with coin a tenth the size of a dime).
The UK hasn't been on the silver standard since 1816 but our currency is still officially called Pound Sterling so it's entirely possible to have a fiat currency with a bullion name
Also despite the whole debate being interesting as a thought exercise as has been pointed out dungeons don't stand up to much logical scrutiny and we're talking worlds that have dragons and gods that demonstrably exist so it's odd that currency is where people draw the line on believability
You also missed the point, they convert iron to steel anyway, this is something this world does, the issue is coins being the source of iron. I also think your a little off on your figures but the paradox involved is unaffected by your logic either way.
Actually you missed the point. I was agreeing with you that the economy as setup in the game is flawed. One - even if the ratios are a little off, 2 iron coins of input do not equal one steel coin of output, and Two - the 2 to 1 ratio does not include the value of the additional materials and labor required. So, it must be a fiat currency to make any sense.
But as many have said, its a game system so roll with it. Forgery would require the ability to stamp or imprint the coins correctly.
This was pointed out when Dragonlance first came out back in the mid 80's. When our DM forced our characters to go through a portal to Dragonlance, the first thing my Paladin did was have his full plate armor melted down, recast into coins, then repurchased another set of armor and pocketed a ton of coin.
And for those that don't know, Steel is made from iron and a tiny bit of carbon. Not exactly difficult, all you need is a forge that runs hot enough.
The cost of acquiring that tiny bit of carbon and the cost of heating that forge so it is hot enough is an additional cost, that greatly reduces the profit of melting down an iron coin.
I don't think you grasped the paradox involved in commodity coinage, if you didn't glean the issue from what is said i don't think you ever will, but thanks for the effort to take the time to think about it.
I know I am missing something from what you said. 2 iron coins = 1 steel. So if you melt 2 iron coins, how do you make money? If you melt 1 iron coin, it does not become steel as it needs other metals and items. In addition, that forge needs to burn a lot of fuel due to the high heat needed to burn some ingredients and melt out impurities.
Ignoring the capital cost (forge itself), you need to have 1 iron coin, + other ingredients + fuel for the forge (consumable) + cost of labor. If ingredients +fuel+labor comes out to less than an Iron coin, yes you can make money via counterfeiting. But I doubt you would break the economy as the amount made would not be that much would it?
You’re missing the economic principle, not the metallurgy. The official table says 2 iron coins = 1 steel coin. That creates an arbitrage loop whether you can literally melt them or not. If the rules tell players “iron coinage exists, steel coinage exists, and they trade at 2:1,” then by definition players will look for ways to convert. The system breaks at the design level, not the forge level.
Even if you handwave fuel, labor, and inefficiencies, the problem doesn’t go away: a coin cannot be both currency and a raw material without inviting arbitrage. That’s why real-world economies never used iron or steel as their primary standard — they’re too useful industrially. The gameplay issue isn’t counterfeiting, it’s that the rules themselves tell players “here’s free money” unless the DM blocks it. That’s not a narrative flourish, that’s a world-breaking flaw.
Actually I am not missing the economic principle as you are ignoring the cost of production. You can't say you double you money if you just melt iron and convert it into steel. There is a production cost to convert that iron coin into a steel coin. That production cost is what shrinks that profit of converting. The question is how much is that production cost? It is possible that cost is more then a single iron coin which results in losing money, not doubling your money. But the production cost can be a lot less which supports making a lot of money, but is still less then double.
Production cost is a part of the supply/demand curves and that is a basic part of economic principle.
If you make your own money, how is that not counterfeiting? If I melt down iron and convert it to steel coins, I am increasing the supply which affects the prices/inflation of the area I am spending in. Adding so many steel coins will be noticed by the Government of an area. There has to be a Government otherwise even gold coins are useless and contain minimal value outside the metal itself. Governments are what gives value to coins/wampum/large stone circles on a seabed 60' underwater/etc.
So how is melting and converting one coin into another not considered counterfeiting? Counterfeiting appears to be free money, but is it?
Along those lines the issue can be solved in DnD by adding counterfeiting is punishable by death. Once a DM knows players are counterfeiting, the PC dies.
At this point I feel like this is a hill you are determined to die on, but I'm not really clear on why. No matter how many examples of possible reasons or ways that steel coins could work, or why coin conversion would be problematic you come back to your same couple of arguments. Many commenters have suggested work arounds to the real-world issues you seem to be stuck on (in an imaginary world of dragons and wizards) but you reject those outright, and yet you say that you've already retconned the problem with the silver-plated gold thing.
At this point this seems like an issue in search of a problem, so I'm legitimately curious what the point of this post is and what you hope to accomplish with it?
Who says steel in Dragonlance is made by adding carbon to iron? Nothing about any world has to follow the rules of ours. I mean, compared to shooting a cross-bow multiple times in 6 seconds this is minor, minor, minor.
Also, The DMG is explicit in this:
The Game Is Not an Economy. The rules of the game aren’t intended to model a realistic economy, and players who look for loopholes that let them generate infinite wealth using combinations of spells are exploiting the rules.
Look. If iron or steel has value X, what you do is you put X-1 iron or steel in the coin. Ok? That's it.
It's just a smaller coin.
Rollback Post to RevisionRollBack
Blanket disclaimer: I only ever state opinion. But I can sound terribly dogmatic - so if you feel I'm trying to tell you what to think, I'm really not, I swear. I'm telling you what I think, that's all.
How could I have missed that, you are so right. The poor Kender this is the real tragedy in all of this. Who cares about steel.
The survival of a species of chaotic stupid fearless fools who don't understand the concept of personal property and have the attention span of a hummingbird that's hopped up on cocaine and Red Bull in a world that's a post-Apocalyptic low fantasy is quite frankly significantly more unbelievable than the steel currency.
Rollback Post to RevisionRollBack
Find your own truth, choose your enemies carefully, and never deal with a dragon.
"Canon" is what's factual to D&D lore. "Cannon" is what you're going to be shot with if you keep getting the word wrong.
How could I have missed that, you are so right. The poor Kender this is the real tragedy in all of this. Who cares about steel.
The survival of a species of chaotic stupid fearless fools who don't understand the concept of personal property and have the attention span of a hummingbird that's hopped up on cocaine and Red Bull in a world that's a post-Apocalyptic low fantasy is quite frankly significantly more unbelievable than the steel currency.
You just described pretty much every party I’ve ever played with
I'm to lazy to read the whole thread but I'll pull some info from the 3e Dragonlance book which sheds light on the reason for the steel piece, I'll pop into a spoiler as its a bit lengthy:
In the Age of Dreams and the Age of Might coinage was developed that reflected the worth of the time. Those metals thought more precious made coins worth more. Copper, Silver, Gold and Platinum were the only metals used as coins. Gold became the standard monetary unit and was a common place sight in Istar and abroad, Barter did exist but it was very much the exception than the rule.
Following the first cataclysm, however, the steel piece became the standard monetary unit for Ansalon, replacing the Gold Piece.
Steel had become scarce and was needed for weapons and tools and for reforging the war torn continent of Ansalon.
Gold, because it was too soft for either of these applications, became nearly worthless except for ornamentation.
Barter as a method of commerce is far more common in the Age of Despair and has moved tot he forefront in the Age of Mortals.
Strong governments have not emerged to push forward the use of either a Gold or Steel standard and so goods that can be used tend to gain more than Gold or Steel.
Steel still tends to be valued higher and in cities and nations where government remains in place the Steel system remain.
So there you go, multiple different ages/era's/epochs of time and various catastrophes moved the population toward using steel as a monetary system so for me shows a different psychology to money, steel became the most important material and so became worth the most, riches became measured in how much excess steel you had not in the shiny gold and silver baubles you surrounded yourself with....although some Dragons might disagree. You could draw a parallel with the Fallout universe and their use of caps even though they still have access to old world money and bars of gold or silver.
The real problem I have with your arguments, such as they are, is their internal inconsistency. It is clear you are grasping at straws, ignoring a large number of obvious data points to justify a frankly silly conclusion.
Atvits core, there are two things currency requires - it needs some kind of backing and it needs legitimacy. You are wrong in your statements on the former and inconsistent on your statements in the latter.
I will start with your factual misunderstanding of the first point, since your being demonstrably wrong in this regard seems to be your fundamental problem. In your first post, and in subsequent posts, you harp on the price of materials and how that should determine cost or you believe that the usage of steel as a fiat must be tied to another material, like gold.
This, of course, is just wrong. While coinage sometimes has historically represented its weight, and sometimes has stood as a substitute for gold in reserves, fiat coinage need not be tied to anything material. We know this is true because it is literally how the modern world works - coinage has not been tied to materials for decades; it is backed not by material but by the word of the government as to its value. And this is not a new concept - there are historical examples of fiat money backed only by the government’s word for thousands of years.
Thus, your trying to tie steel coinage to material wealth is without any real merit. It is easy to imagine that the coinage in Dragonlance is fiat currency backed by the issuance. Accordingly, one can easily write off all of your arguments on the value of steel - no matter how much steel it contains, that longsword is not backed by government decree, so the comparable weight of metal is irrelevant.
The second issue is one of legitimacy, which you have been hypocritical on. You seem to both argue that players can convert something like iron coins or a longsword into currency, and therefore the currency does not make sense. But, as already set forth, it is not hard to come up with imaginings on how coinage could be hard to create. Thus, even if players do try to do so, all they’re creating is something similar, but, without being an exact copy, does not get the metaphysical value ascribed by government-backed fiat coinage. Thus, it is not particularly hard to discard this argument with in-lore reasons (without even getting into the issues of the rules).
With how utterly easy it is to come up with ways to dispose of all your complaints, all of which are based in history, this really feels like a problem born of misunderstanding of how currency systems work. With a little more understanding and a little bit of critical thinking, it is quite easy to figure out how a steel coinage economy could work and thrive.
Now, is it what I would use? No. But this is a culture where steel was culturally important, and precious metals were explicitly frowned upon. If random folks on the internet can figure out the answers to your perceived problems in a matter of seconds, I am sure an entire culture with magic, metallurgy experts, and entire teams of governmental officials dedicated to solving these trumped up problems could.
Neat ideas, but that actually proves my case — you’re inventing fixes because the published system doesn’t work on its own. Blank slugs, dragon skin cores, enchantments… all fine as house rules. But that’s not what the books give us. What they give us is “steel coins,” and taken at face value, that collapses under the most basic economic logic.
I’m not saying it can’t be fixed — I’ve already retconned it cleanly in my own games as silver-plated gold coins people just call steel. What I’m saying is that pretending “it doesn’t matter” doesn’t cut it. If the economy can’t pass the simplest suspension of disbelief test, players who think even a little about the world are going to bump hard into it. That’s not flavor, that’s a design flaw. This is why I brought it up it is so flawed suspension of disbelief tests one will to play, it a lingering sliver of thought that unravels logic. It would be similar to playing a game for you where the GM said everyone fights upside down. Because, i donno, i thought it was interesting, this is how the world works. Then players have to decide if the logic causes them less enjoyment because your disbelief is directly challenged. This is what makes some movies that make no sense, hard to watch.
You know what else can't pass the simplest suspension of disbelief test? Dungeons.
Fiat doesn’t save it. Fiat still needs legitimacy, and legitimacy only works if players accept the premise. The books never say “fiat,” they say “steel.” Steel is a raw material with obvious industrial use, which makes it the worst possible candidate for fiat currency. If the only way to defend it is “just imagine fiat,” then you’ve admitted the system as written fails.
I should be clear: I’m analyzing the core material as written, not your retcon. I have already indicated what retcon I prefer to solve this. Your claim of inconsistency only works if I accept your fiat framing, but that’s your patch, not what the books give us. My critique is of Dragonlance’s system itself, and by its own rules, it collapses.
The minutia of how the currency system works are not relevant to the story and therefore only a bad author would include them. This is the same reason character bathroom breaks are not mentioned unless necessary to the plot. Particularly since the US had been moving away from the gold standard since FDR, nearly a half century before the first book was published, the authors could pretty safely assume most readers would be able to apply basic common sense and basic knowledge of currency.
They were right to exclude unnecessary details and leave it to the reader to apply common sense - the books would have suffered had they instead catered to your fixation on this complete non-issue.
That argument cuts both ways. If it’s such a non-issue, it shouldn’t break suspension of disbelief the moment anyone looks at it. Bathroom breaks don’t wreck a setting, but an economy that collapses under its own rules does.
Funny thing — D&D actually has made “bathroom breaks” part of play. Early modules like Tomb of Horrors and Expedition to the Barrier Peaks had latrines, waste pits, and even monsters hiding in them (otyughs, carrion crawlers, brown mold, etc.). The 1e DMG literally has rules for disease and parasites. When going to the bathroom introduced danger, it became relevant to the story. So this is where new players are at, forgetting the past? Use of this example is very appropriate, unwittingly.
Good old brown mold, 5e has destroyed your brown roots, but I still remember you when i go to the washroom. Oh, how the mighty have fallen.
When you give currency a bullion-type name, it's reasonable to assume it's bullion currency. Fiat currency generally has a specific name based on the issuer. Most likely the authors themselves lacked basic knowledge of currency and they picked steel coins because it was a way to sound cool and different. Of course, the entire D&D money system has always been nonsense -- no-one historically used four different bullion metals for their currency, at most you'd see two (gold and silver, averaging at about a 40:1 exchange ratio), maybe with some base metal fiat coinage (e.g. pennies and nickels in the US) that didn't derive its value from its precious metal content, it was just for convenience because a precious metal coin with the right content would be impractically small (the dime, quarter, half-dollar, and (old) silver dollar all have weight proportional to their value; imagine trying to deal with coin a tenth the size of a dime).
The problem with fiat currency is that it requires a strong government to guarantee its value. In the post-Cataclysm era (which is when Dragonlance was said to have switched from gold to steel currency) there's a distinct lack of strong central governments to enforce such edicts.
But really, that's the least of the setting's issues: it's got to deal with kender, a continent that's too small for the number of different sapient species living on it, the authors' weird views on morality (the Cataclysm came about because the world was shifting too strongly towards Good on the Good/Evil alignment, so the good-aligned deities dropped an asteroid on it, killing countless innocent people), and kender.
Find your own truth, choose your enemies carefully, and never deal with a dragon.
"Canon" is what's factual to D&D lore. "Cannon" is what you're going to be shot with if you keep getting the word wrong.
How could I have missed that, you are so right. The poor Kender this is the real tragedy in all of this. Who cares about steel.
The UK hasn't been on the silver standard since 1816 but our currency is still officially called Pound Sterling so it's entirely possible to have a fiat currency with a bullion name
Also despite the whole debate being interesting as a thought exercise as has been pointed out dungeons don't stand up to much logical scrutiny and we're talking worlds that have dragons and gods that demonstrably exist so it's odd that currency is where people draw the line on believability
Actually you missed the point. I was agreeing with you that the economy as setup in the game is flawed. One - even if the ratios are a little off, 2 iron coins of input do not equal one steel coin of output, and Two - the 2 to 1 ratio does not include the value of the additional materials and labor required. So, it must be a fiat currency to make any sense.
But as many have said, its a game system so roll with it. Forgery would require the ability to stamp or imprint the coins correctly.
The cost of acquiring that tiny bit of carbon and the cost of heating that forge so it is hot enough is an additional cost, that greatly reduces the profit of melting down an iron coin.
Actually I am not missing the economic principle as you are ignoring the cost of production. You can't say you double you money if you just melt iron and convert it into steel. There is a production cost to convert that iron coin into a steel coin. That production cost is what shrinks that profit of converting. The question is how much is that production cost? It is possible that cost is more then a single iron coin which results in losing money, not doubling your money. But the production cost can be a lot less which supports making a lot of money, but is still less then double.
Production cost is a part of the supply/demand curves and that is a basic part of economic principle.
If you make your own money, how is that not counterfeiting? If I melt down iron and convert it to steel coins, I am increasing the supply which affects the prices/inflation of the area I am spending in. Adding so many steel coins will be noticed by the Government of an area. There has to be a Government otherwise even gold coins are useless and contain minimal value outside the metal itself. Governments are what gives value to coins/wampum/large stone circles on a seabed 60' underwater/etc.
So how is melting and converting one coin into another not considered counterfeiting? Counterfeiting appears to be free money, but is it?
Along those lines the issue can be solved in DnD by adding counterfeiting is punishable by death. Once a DM knows players are counterfeiting, the PC dies.
At this point I feel like this is a hill you are determined to die on, but I'm not really clear on why. No matter how many examples of possible reasons or ways that steel coins could work, or why coin conversion would be problematic you come back to your same couple of arguments. Many commenters have suggested work arounds to the real-world issues you seem to be stuck on (in an imaginary world of dragons and wizards) but you reject those outright, and yet you say that you've already retconned the problem with the silver-plated gold thing.
At this point this seems like an issue in search of a problem, so I'm legitimately curious what the point of this post is and what you hope to accomplish with it?
Who says steel in Dragonlance is made by adding carbon to iron? Nothing about any world has to follow the rules of ours. I mean, compared to shooting a cross-bow multiple times in 6 seconds this is minor, minor, minor.
Also, The DMG is explicit in this:
This is .......
Look. If iron or steel has value X, what you do is you put X-1 iron or steel in the coin. Ok? That's it.
It's just a smaller coin.
Blanket disclaimer: I only ever state opinion. But I can sound terribly dogmatic - so if you feel I'm trying to tell you what to think, I'm really not, I swear. I'm telling you what I think, that's all.
The survival of a species of chaotic stupid fearless fools who don't understand the concept of personal property and have the attention span of a hummingbird that's hopped up on cocaine and Red Bull in a world that's a post-Apocalyptic low fantasy is quite frankly significantly more unbelievable than the steel currency.
Find your own truth, choose your enemies carefully, and never deal with a dragon.
"Canon" is what's factual to D&D lore. "Cannon" is what you're going to be shot with if you keep getting the word wrong.
You just described pretty much every party I’ve ever played with
I'm to lazy to read the whole thread but I'll pull some info from the 3e Dragonlance book which sheds light on the reason for the steel piece, I'll pop into a spoiler as its a bit lengthy:
In the Age of Dreams and the Age of Might coinage was developed that reflected the worth of the time. Those metals thought more precious made coins worth more. Copper, Silver, Gold and Platinum were the only metals used as coins. Gold became the standard monetary unit and was a common place sight in Istar and abroad, Barter did exist but it was very much the exception than the rule.
Following the first cataclysm, however, the steel piece became the standard monetary unit for Ansalon, replacing the Gold Piece.
Steel had become scarce and was needed for weapons and tools and for reforging the war torn continent of Ansalon.
Gold, because it was too soft for either of these applications, became nearly worthless except for ornamentation.
Barter as a method of commerce is far more common in the Age of Despair and has moved tot he forefront in the Age of Mortals.
Strong governments have not emerged to push forward the use of either a Gold or Steel standard and so goods that can be used tend to gain more than Gold or Steel.
Steel still tends to be valued higher and in cities and nations where government remains in place the Steel system remain.
So there you go, multiple different ages/era's/epochs of time and various catastrophes moved the population toward using steel as a monetary system so for me shows a different psychology to money, steel became the most important material and so became worth the most, riches became measured in how much excess steel you had not in the shiny gold and silver baubles you surrounded yourself with....although some Dragons might disagree. You could draw a parallel with the Fallout universe and their use of caps even though they still have access to old world money and bars of gold or silver.