And this is highlighting why it's silly that you BOTH get the salvaged equipment and your troops don't need you to give them equipment to upgrade.
It should have been one or the other. Either the troops are salvaging the equipment, and we're calling it a day as to where they got their stuff (traded and fixed armor while you were waiting in town) or you are obligated to fork it over when you are upgrading and need to keep an armory. Shallow the price curve and add in some sort of requirement for higher tier armors so you don't equip Tier 6 stuff day 2.
But ultimately, that's why the economy never got fully ironed out (it's not AS bad as some try to make it, as this supposed to be a dedicated trading game, and what is there is functional). As discussed, equipment sales from a few battles fully funds your kingdom. If that wasn't there, this would immediately start to shift to a completely different game, or at least how the players approached it and what they were demanding throughout EA