Can Anyone Tell Me Why The Economy Sucks?

The only thing that matters is the value of items compared to the value of LE.

LE is inflating way slower than items are, leading to the decrease in prices. So in practise LE is not inflating, because its value is climbing as a currency compared to the value of items.

You're absolutely right, adding emeralds might lead to chaos. I did not think it far enough.

Yeah, the only thing I see that might work is lowering drop rates. The items people have would slowly become more desirable, leading to people actually buying stuff.

 

the value of items changes in correlation to the value of le.

you are judging two factors by each other, that's not how you do it.
as google says "Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service" that's exactly what is happening to le. le is the currency items are the goods. not the other way around.

 

You can buy way more with your 15LE now than what you could have bought before gameplay update. Does not look like inflation to me.

 

the worth of le has been going down since the gavel update.
when gavel came out the value plummeted and rose slowly after gavel but its still going down.

 

Problem 1:
The emerald count has only been going up since the launch in 2013. That's 4 years of emeralds just piling up. With newer, more rewarding quests being added with every update, it's becoming easier and easier to earn emeralds. More than just quests, you can get multiple emeralds from every mob, starting from the Gavel update. Beyond that, the playerbase of Wynn is going up with time, meaning more and more people earning more and more emeralds.

Problem 2:
The item count has only been going up since the launch in 2013. As colin said,

With money being worth less and less, that means that overpriced items are even more overpriced than they would be normally.

Simply put; too many emeralds, too many items, not enough ways to get rid of them.