Debt is a Pit: The Economics of the World of Ice and Fire

In Game of Thrones, Daenerys’ teenage dragons are not the only dragons out of control but the golden ones as well. There is a constant reminder from various characters especially the Northern men that “Winter is Coming”. Winter not only represents the season, but a recessionary period – a period of shortage. Whether you are in the real world or a medieval fantasy world with seasons that last for years, principles like supply and demand, interest rates, inflation and scarcity are real world examples that still apply. While Martin does not go into detail of medieval high finance, the concepts he covers show just how much the economic decisions of those in power affect the current state of the World of Ice and Fire.

Prior to the show, the Mad King left a full treasury according to Eddard Stark. This can be attributed to Tywin’s tenure as the hand of the king. He stimulated the economy by building roads, increasing trade by reducing shipping fees and tariffs and looking for profits as the economy grew 1. As stated in the World of Ice and Fire, he was keen on settling the crown’s debts from the Braavosi by using the gold from Casterly Rock.  This reflects Tywin’s mindset that being in debt is bad and being the creditor is good, due to failure of his father to collect debts and even forgive common merchants 2. This brought emergence to the alternate family motto: “A Lannister always pays his debts”


After the Mad King died and Robert became king, the kingdom accumulated debt. The crown owes three million dragons to the Lannisters, two to the Iron Bank and another million to Faith of the Seven 3. While this was a concern of medieval monarchs, they do not always focus on it. It is common for kings and queens to spend more money without looking at the consequences to keep and show their power 4. Investing in infrastructure or public goods would have been a good way to sustain the economy but instead the throne spent money on lavish weddings, feasts and jousting tournaments, events that are costly but do not provide a proper return on investment. In addition, when the ruler cares so little about debt such as Robert, he is easily influenced by a constituent like Littlefinger who makes the fiscal decisions on his behalf. Littlefinger, of course, always has ulterior motives such as prompting Robert to hold a tournament for his brothel to prosper at the cost of the economy.

The video proves how little Robert cares about the debt, throwing money at the tournament and describes borrowing as “counting coppers” 5

Economics also affect warfare. Fighting wars cost a lot of money, as seen many times throughout the show: anyone that sits on a pile of gold can buy armies, ships and loyalties. This fact explains a lot about why the Lannisters have been successful in the past wars. Robert’s Rebellion and the War of Five Kings cost millions and in order to fund this war heavy borrowing was needed to be done.  Appointing the Lannisters in important positions and giving them control was a way to borrow money at a cheaper price and longer horizon. Along with the Lannisters, money was borrowed through the Iron Bank. However, borrowing is not easy, due to the uncertainty of the outcome of the war, the Iron Bank imposes a very large interest charge to offset the possibility of default 6.

With the recent burnings in Game of Thrones, it is harder to support a former fan favourite so some fans have turned to the entity: The Iron Bank. While the Free Cities all have their own banks, the Iron Bank is the main superpower and is richer than all combined 7. Game of Thrones is filled with grey area characters and families with questionable morals and unpredictable motives. The Iron Bank’s amorality shines bright and distinctly separates itself from the rest of the world. The Iron Bank’s motives are crystal clear. They are all about the numbers and disregard complicated questions like who’s good or bad.

There is no exact historical counterpart to the Iron Bank but it is largely based upon the northern Italian cities. Visually it compares to Venice, however economically, it is more related to Florence and Genoa. After the fall of Rome, Florence produced a reliable currency called florin 8. The florin is ensured to have the exact quantity of precious metals it is said to. The Florentine bankers became a main to source of wealth to families and wars throughout Europe 8. However, unlike the Iron Bank there is absence of power and political sway. Powerful clients would have more bargaining power than others, for example, France often used military action as a threat 8. The Iron Bank’s policies are non-negotiable and cannot be moved.

The Iron Bank can easily break the entire economic and political situation of the families they loan to. This is similar to Genoa which controlled the Spanish Habsburg Empire 9. Following initial military success, the Spanish defaulted on their debts. After this, Genoese bankers declined to loan any more money, resulting in the Spanish losing control of their army 9. Units refused to fight until they were paid. Genoese Bankers held the fate of the wars through their capital 9.

The bank’s perspective is a long term one, unlike the monarchs in King’s Landing who are obsessed with short-term gains, the Iron Bank invests and lend the money to whomever they feel is valuable in the future. This is why they provided loans to Stannis, he has a reputation of honouring his duties and being a strict man, it is in his character to avoid extravagancies that will push the crown into further debt. However, even with Cersei halting payments, the Iron Bank is not one to roll over and let the crown get away with their debt. As the Bravoosi say,

“The Iron Bank will have its due”

Westerosi currency is bullion based, similar to the Middle Ages currency like the Venetian ducat or the medieval British Sterling. The worth of the coins is based on how rare gold and silver are and how much precious metal is in it 10. This is in contrast with modern society, where fiat money is used, by itself it has no value since it is just paper but to us it is worth something because the government declared it as legal tender to purchase goods and services.

Along with excessive borrowing, the crown can raise money through inflation. Inflation occurs when a commodity (in this case gold or silver) is abundant. The large money supply decreases the value of the coin leading prices to skyrocket. It would take three dragons to buy bread instead of just one copper. Once inflation happens no powerful entity will be able to mandate a ceiling on prices, as this will just create a black market and merchants will refuse to sell at a cheaper price 10. Tywin recognized the dangers of inflation, In Cersei’s flashback Lord Tywin was very displeased and had a murderous look on his face when Lord Rykker suggested to extort the Lannister gold from the vaults, as this would have increased the money supply and ruined their house 11.

In his time as Master of Coin, Littlefinger managed to increase revenue, Tyrion concluded that “A man like Petyr Baelish had a gift for rubbing two golden dragons together and breeding a third”, a process called coin-clipping 12. This practice is the act debasing and shaving off portions of the coin, decreasing the amount of precious metal and is very popular during the Middle ages 13. In the fourteenth century, France faced an issue similar to Westeros during the War of Five Kings. Charles V needed to raise money to pay ransom to those who captured his father. In order to raise cash, Charles debased the coins, similar to Littlefinger 10.

To fund the struggling economy, Westeros would have had a hierarchal taxation system similar to the European feudalism days. Depending on your location, you pay the overlord which in turn make its way to the kingdom. Tax does not always mean gold or money. For example peasants commonly pay in produce while the smaller lords pay in gold 14. There is a pyramid structure for taxation: those that live in Last Hearth would owe taxes to the Umbers and the Umbers would pay the Starks then the Starks would give the fee to the crown. As the war progressed, King’s Landing also imposed a tax to those coming to the city and invoked a tax on whoring, commonly known as “dwarf’s penny” because of Tyrion’s involvement 15

Prostitution is practised in both Essos and Westeros and is economically beneficial. All ethics aside, it was more profitable to continue prostitution and impose taxes than to simply ban it 16. It is a major source of revenue for both continents. Littlefinger owns a brothel and considers it a very good investment. He tells Ned,

“Brothels are a much sounder investment than ships, I’ve found. Whores seldom sink, and when they are boarded by pirates, why, they pay good coin like everyone else” 16

In Essos, the Free City of Lys is famous for having the best prostitutes in the world. Meanwhile, in Slaver’s Bay, masters rented out the services of their bed slaves. In Braavos, prostitutes are categorized into three: street walkers, brothel workers and high-class courtesans 16. The high class courtesans, although not as skilled as the ones in Lys, are treated like celebrities and even own their own boats16. Medieval Europe believed that men are not able to control their sex drive so prostitution was never frowned upon and was considered a regular pastime 16

Doreah talking about Irogenia of Lys, a sought after high-class courtesan17

Agriculture is a big part of Westeros economy, with a vast amount coming from the Reach and the Riverlands surrounding the Trident 18. Westerosi citizens reap what they sow (except for the Greyjoys) and as the economy faces a downturn, the less they have. Additionally, due to the war The Reach has been temporarily cut off and The Riverlands was ravaged by the Mountain, leading farmers to flee and crops to be burned. This significantly reduces resources and introduces the concept of scarcity which can drastically affect human behaviours and attitudes. The dissatisfaction and starvation of the smallfolk caused the riots of King’s Landing, resulting in damages to the city and several people dead 19.  Like many monarchs, the Lannisters rely on fear to rule. In contrast, the Tyrells recognize the difficulty of ruling starving, angry people. Margaery is often seen spending time with the poor and providing them food, winning their affection.

A lifetime of wealth and power has left you blind in one eye. You are the few, we are the many. And when the many stop fearing the few…” -High Sparrow 20

In the North, we always see old characters disparaging younger ones as “summer children.” “Winter is coming” is not just about the season, it represents hardship. For an agrarian society like Westeros, the summer is when the economic boom happens while the winter represents recessionary periods. Nobody knows exactly when it comes but like economists, maesters are assigned to predict when the seasons occur due to their extensive knowledge 21

Historians believe that Europe’s economic recovery during the Middle Ages was due to the environment. This society’s primary economic activity was farming and taxation of crops 10. During the warm periods, Europe saw an expansion for three centuries: arts prospered, cathedrals were built, lands were farmed and population grew 10. However, in the early fourteenth century: the climate became more hostile: crops died, sheep rot, food prices rose and people are forced to eat grass. This left them vulnerable to disease and the Black Death took away half the population 10. Although the number of deaths is quite grim, the population was down to half and more resources were available for everyone. Prices went down and cost of labour went up, promoting an economic boom 10. Westeros experiences climate phases like medieval Europe. Although, much more exaggerated since the seasons last for years, they thrive in the summer giving room for population to rise and when winter comes, malnutrition occurs wiping out a number of people and leaving them vulnerable to illnesses.

The continent of Essos is much larger and diverse than Westeros. Essos’ customs are also very different. Slavery, for example, is illegal in Westeros but is very widespread across Essos 22. As the name suggests, Slaver’s Bay is the heart of all slave trade. Valyria, Qarth and Ghis practiced slavery very similarly to the Romans. While some perform hard labour, they were also appointed significant roles such as book keepers, translators, etc 22. Unlike Westeros, Essos is prosperous and have high levels of economic certainty 23. In addition to slavery, Essos is home to major hubs and frequently engage in trade. Each city specializes in some sort of good, for example the Lorathi textile merchants specialize in velvet which they frequently trade 22. Although Essos have their own currencies, transactions can also be completed by barter. For example, Daenerys agreed to exchange with Kraznys mo Nakloz, trading her dragons for the Unsullied before breaking that promise and burning him alive. In the Middle Ages, while coins have gained popularity in the market, people still used the barter system. 24

One of the reasons Game of Thrones is so popular is that even though it is a medieval fantasy the themes are still relatable realities. Even with the presence of whitewalkers, dragons and magic the laws of economics still apply. Martin gathers historical inspiration from the various aspects of the Middle Ages. Even though he does not go into immense detail, it is a clear depiction of how the economy was back then with exaggerated elements to provide an escapism for the viewer.



Works Cited

[1] Martin, G. and Garcia, E. .(2014) The World of Ice & Fire. Page 114

[2] Martin, G. and Garcia, E..(2014) The World of Ice & Fire: Page 201

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