The value of toothpicks rises (for a short moment) but the value of money doesn't fall .
Why ?
Because if the total cash in the game is 1000 PP and you sell your toothpicks for 1 PP, then once you sold 1000 of them , you have 1000 PP, e.g the total cash in game and your toothpicks are now worth 0 because nobody has money to buy them or anything else for that matter . Obviously the value of toothipicks didn't "skyrocket" at all, in the contrary it has been totally destroyed . In reality this scenario doesn't make sense anyway because players would stop buying toothpicks long before going broke and if you wanted to get rid of them, you'd have to lower dramatically the prices .
It is only if the total cash in game increases that prices of everything (not only of toothpicks) can increase and not the other way round .
Inflation is the measure of increase of the total cash in game and as I already said, it is only the killing of mobs and selling of items to NPC which increases the total cash in game .
The prices at which PC buy and sell among themselves are irrelevant for inflation - these just shuffle the available money among the players without changing the total amount .
Ya, I see your point and have to agree. Without the cash in game, the PC could not afford to spend more on toothpicks, and thus the price would eventually come down.
Oh well, it was only an idea. Thanks for sticking with me on that one. You've made a friend here. Glad we are on the same team.