In the "scrip" economy, couldn't they just let the value of the scrip change organically? If scrips are getting too precious, you can tell your babysitter that he'll be getting one scrip per two hours instead of one hour. If scrips are indeed that rare, he'll accept it, and the scrip-time ratio will naturally reflect the scarcity of scrips.
Since this thing does happen with Dollars, I reckon his analogy is bad, and adding more Dollars won't solve the problem.
You've got it. I made the same point a few weeks ago: http://news.ycombinator.com/item?id=421617. It doesn't seem like rocket science, but maybe it is; the vast majority of economists, including Nobelists like Krugman, just don't seem to get it.
