I think this needs to be adressed and I would even consider it game breaking.
Domestic markets are way out of line imho. In my latest game, I only have 6 productive cities, so there aren't that many goods around. My domestic markets are generating about 46000 gold per round. It started at about 16k when I realized that the gains of the markets are insane, especially in my capitol. I only used to juggle my own goods in the colony so far. When I started to import basically everything else from Europe, it completely exploded. If I just sold everything I produce in Europe, Africa or Port Royal, I would perhaps get 10k per turn.
Firstly, that city screen you posted fills me with such dread.
What you describe does sound very broken. However, the "too much money" issue has been around for a very long time.
Really, I think the root issue is the lack of reason to make money, or it lacking significant outflows.
It's like the Underpants gnomes:
1 Steal underpants
2 ????
3 Profit!
Except swap 2 and 3. What exactly is making profit in aid of? If you had necessary expenditures then at least the game could revolve around keeping the plates spinning, but I'm not sure there is even a real gameplay loop to be found currently, let alone one that is flawed. The natives don't put up much of a fight, and lots of people don't even play with other Europeans enabled. If they do, I think most people find them not much of a threat.
Your screenshot includes a demand for "everyday clothes", but what happens if the city doesn't get them? Nothing, really. They're just another interchangeable good for you to make pointless money out of. Maybe you could throw it away on unnecessary military, or buy an expert cigar roller to replace a non-expert. But was that replacement necessary? Does it make a tangible difference to your "success"? Not really. It's just an arbitrary frivolity.
Furthermore some of the demands are really high, while others are really low. Coffee sells like crazy, while no one wants coats. (Is that climate based because I would understand if no one in the jungle wants coats.)
Demand isn't equal for all social classes, however all social classes demand coffee and salt. Good luck having significant demand for wine, though.
It's even worse that the prices for the goods in Europe are extremely low, even if I never sold anything of the sort. Producing furniture or beer (and many others) to sell in Europe would be completely irrelevant at a selling price of 6. Do the goods of the other European powers influence the market prices of the player? Many goods are basically useless. I don't see how I could overproduce these extremely low value goods for too much wealth. (see quote)
Another part of a solution could be that goods that come exclusively from the new world can not be bought in Europe/other markets or are much, much more expensive to buy then to sell. That you can buy everything in Port Royal seems strange, too.
Frankly I think there should be more things that you
need which you can only get from Europe. That would give you a nice gold sink to support more advanced cities, for example maybe you buy medicine from Europe to combat health penalties from huge pop and high-tier factories. Or your people are more demanding of the full suite of luxuries, so you either need to diversify massively, or sell your polar coats and furniture to import rum and cigars so your worker bees don't riot.