Can't salvage coin bought items
it’s intended.it stops buying items just for the sake of salvaging them
To elaborate, if players can buy a cloth armor from NPC’s for 12c and salvage it for 2 jute scraps, then sell the jute, that creates an effective price ceiling on jute – it will never sell for more on the trading post than 6c each, because NPC’s have an unlimited supply of the stuff.
Usually if a game wants a wholly player driven economy, they try to shy away from NPC price ceilings and let it be determined by the player.