It's more like people being to cheap to soulbind their items.
Of course death is a very harsh penalty when you have 2-3 soulbound items because the owner would want to get refund on all the tradeskilled items they've bought. If people bothered to actually soulbind their more vital gear (I'm usually sporting 2-3 pieces which aren't soulbound - but to be fair, most of my gear is quested) this wouldn't be an issue in the first place. ~
I honestly liked the old system; with this new - soulbound fills little purpose than keeping certain items off the market; and that makes it feel sort of pointless.
Why not just remove the experience penalty all together, add a 10% durability hit, make items soulbound on equip and be done with trying to slowly creep over to other games experience penalty.

They won't add soulbind out equip.  I really don't know anybody who soulbinds their items anyways.  Its best to not soulbind them and sell them back until much higher level.  The new death penalty should cater to both the people that hate the current system, and to the people that thought the old system was fine, due to a hefty exp penalty still in place.  I like games that piss you off when you die.  Makes living that much better. 

The way I see it is that the economy is so screwed because there is not a BoE on items or a item decay system.

Not sure which EQ1 game you were playing but the economy was only "relatively" OK until about 2 months into the game.  At which point mudflation started to kick in and only accelerated when more mobs started to drop cash.  And accelerated even faster with each expansion.

It'd be nice if commonly aquired gear decayed at a much faster rate than higher quality grades.  However, to compensate higher quality grades would also be insanely expensive to repair.

Any item of common quality or lower should have a chance of outright breaking and being destroyed forever, or after being "destroyed" have a hefty repair cost.

Rare items should have a very very small chance of outright breakage and associated inflated repair cost.  While Heroic and up should be non-destructable but have insanely hair-pullingly frustrating repair costs.

The biggest problem with outright destruction of items in games of this type is that many people play it to accumulate rare/godly/braggadocious gear.  To have something that might only drop once a month on a server be destroyed when it might take something a year or more to get it...well that would hurt.

However, that problem doesn't exist with commonly dropped items.  Thus there is no particular sadness if something of common or uncommon quality was broke and lost forever, other than having to carry around backup gear.

This introduces a relatively equivalent money sink.  Heroic and higher quality items can't be destroyed and decay at a slower rate, however, they also cost SIGNIFICANTLY more to repair.  Something on the order of 20-40 times more expensive than the previous grade.  You want the best?  Be prepared to pay for the best.  This would also indirectly boost the purchase and eventualy destruction (removal from game of commonly dropped items) as many people would use more common items for daily uses while saving the truly epic items for times when they really need it.  Well unless they had more money than they know what to do with.

Also, this would help keep commonly dropped items from becoming vendor fodder or automatically being deconstructed as the rate they pass out of the game would also make them still desirable to a point.

End result would be an economy with minimal inflation.  Crafters that might actually be able to sell common or uncommon quality items.  And keep common and uncommon mob loot viable on the broker for something other than deconstruction.

Of course, I'm sure there'd be too much whining that it's too harsh, and people of course would much rather eventually pay 1 plat for things that currently cost 1 gold due to mudflation and no significant amount of money leaving the economy in relation to how much money is entering the economy.

Regards,
SB

Wow, i see what you're saying, and thats cool and all for some games, but dude you are alienating just about everyone who isn't a hardcore player.  This is why people turn to buying gold imo.  It costs so much money to keep things going and some people do not have the time to make that money and lvl up and it makes saving up cash for boats and what not nearly impossible should the player ever get his hands on heroic loot.  Now i understand that inflation can be extremely harmful to the economy of the game, but making things this (i dont want to say harsh) difficult would probably destroy the game itself, because people are playing it because they want to play a game.  I for one do not want to sit around managing items and money just so i can repair the few pieces of awesome gear monks DO have.  I have so much frustration just playing the monk sometimes, even when i do get good items, that adding something as hardcore as your proposed system would easily push me off the subscriber list.  I'm already wary as it is and im still waiting for the proposed monk fixes.  I still think things are running well.  Boats are still being sold for the same price and it isn't rising, at least no on shidreth, 2 story houses are still 60 gold and i haven't seen anything being sold by a non idiot for more than that at this point.  Honestly i'd like to see the potential for adventuring to make a little more cash than what its doing now, but im also ok with it if it stays at its current rate. 

Anyway, i don't think your proposal (croaker) is a good idea, especially at this stage in Vanguard.  I could easily perceive it as being the coup de grace the devs are trying to avoid.  Even at a later stage when Vanguard is more stable, i still don't think its a good idea.  I just want to play a game and kill stuff.........