This post, and all the comments you've gotten read just like Heinlein's chess game out of his book, For Us, The Living. He tries to describe a system of capitalism whereby the values and profits are balanced by intervention of various parties. In my opinion (and given it was written in 1939) its a flawed piece of writing.
At the end of the day, fiat and anything else used as a means of transfer, even a barter system, only has value because people believe that it has equal or greater value to whatever it is they're trading it for.
I suppose that's why inflation is there, to make people value objects and items that they need for their continued survival, so that the medium of transfer is worth less (not worthless!) and keeps the whole hamster wheel going.
At the risk of sounding vexatious, maybe it is just the SPS flywheel in another form ;)
RE: How did everyone get paid?