Incorrect. The third guy has $64 of your money. The second guy's bank has $16 of your money, while your bank has $20 of your money. That's where the money is, and it comes to a total of $100.
Now, the bank does have an obligation (or, if you prefer, a debt) to you of $100, but in this simple system, if you walked up to the bank tomorrow and asked for it all out at once, they wouldn't be able to give it to you without borrowing the $80 shortfall from someone else. The debts and obligations may total quite a bit more than the actual money, but there is a cap on the amount of money in the economy. If you know the right people to ask, you can probably find out just how many $US (or whatever currency you choose) are in the economy at any one time. In practice, under normal conditions banks have a large enough reserve that they're unlikely to need to, but in situations where a lot of debts have been defaulted on or lots of people come looking to withdraw their money, if it's happening to other banks as well so they can't loan money out, then the bank gets in trouble.
This is why banks needed bailouts in the GFC, and this is why people lost their savings when the banks closed their doors during the Great Depression. Being a bank is not a license to create money, regardless of whether you regard money as a real thing or an abstract representation of a promise. The purpose of a bank is to allow people who need money to access the savings of others, and for people who have money to have a reasonably safe and liquid if low-return place to invest it.
When it comes to the populations of cities... they're a representative sample. While the GW2 cities are certainly more realistic than GW1 cities were, do you really think what we see is actually an accurate representation of the populations of each area? If someone was to count up all the citizens of Divinity's Reach, you'd come to maybe a few hundred... but if you asked Ree or Jeff what the population of Divinity's Reach was, they'd probably give you an answer in the thousands.Thing is, neither the servers nor our computers would be able to handle that many people (think of the culling you get from big events, and imagine what there'd be with a few hundred NPCs in a busy marketplace... not just on the map somewhere, but in the area of your screen).
Additionally, lore-wise, there aren't actually as many heroes as there are PCs. While canonically every personal storyline happens, lorewise they can only happen once... so there is a total of 15 heroes. Total. Three of each race. From the viewpoint of your personal story, unless they happen to be one of the people you do Arah with, the PCs you meet are not the great hero that's going to/has already destroyed Zhaitan (even if they are from their perspective)... they're standing in for the hundreds of not thousands of Seraph/Valiant/charr/Pact soldiers that lorewise would be taking part in those events beside you.
If you took what you see literally and run the numbers for how many players per server compared to how many NPCs, you'd probably come to a figure where every second person who isn't an enemy mob has killed Zhaitan or is destined to kill Zhaitan. That doesn't sound very realistic now, does it?
No. Look, this is the thing that makes people freak out, so don't worry about it, but you are actually wrong. You (or rather, the bank, but ya) have $100. The next guy (his bank) have $80. He has $16 of the currency, the physical representation of money, that you earned, but that doesn't mean anything because money is not tangible
. That the bank cannot give you a $100 note if you'd go there and demand $100 right then and there doesn't mean that the money
isn't yours (that is handled through another mechanism). The bank cannot pay you because banks are not allowed to create currency. They are allowed to create money
by raising debts, as long as a certain amount of currency is held in reserve.
Consider where money gets its worth from. Remember the example of you buying a can of Coke? You pick up a Coke, incur a debt, and then use the $1 note to pay with. The $1 represents money because you can use it for paying off debts
. The belief that the merchant can use the money for something else (such as buying more Coke cans from the distributor of such) is the one thing that makes him accept such a meaningless thing as a piece of paper as payment for the beverage (of course the belief is ensured because the $1 is legal tender, which means that it cannot be refused as payment for debts).
Of course there is a cap on the amount of money. That's what the reserve rate is for. If you always are required to have X% currency in reserve, there is automatically a cap regardless of how many loans there are, because the amount of currency is limited. Do the math, you'll see that it's true.
You are indeed correct that a million people killing the same dragon as I killed sounds not reasonable. How would that make a point that the merchant is a good simulation? That just makes it worse lol. Also you didn't even address the fact that even though there are definitely richer individuals than any PC in the game world, none of them ever goes to the TP. Even if you consider the PCs as stand-ins, that just means that the TP is a good simulation, not that the merchant is. The cut between the "real" economy and the never-changing, money-spawning garbage disposer is too sharp no matter how you tilt things.