I think that the AI can make money by 'selling' off gear they have in their inventory.

Why are your vassals losing money? If you set them up with good fiefs and make sure they're defended, they should not always be going broke. The AI doesn't have the player's ability to make obscene amounts of money, but they should be able to keep themselves funded and defended.

i think the garrison of a fief is dependent of its value / tax income.
if villages gets raided and you take bad kingdom polices, Economy will be destroyed.