If you look at the market, you notice that some people earn a lot more for an hour of work than other people, which seems unfair. In setting up the time trade circle, the organizers seem to have shared this view. This is a system where members trade hours for services. I can earn time trade hours teaching people to play mandolin, and then spend them on, say, food preparation. It's all very egalitarian: work an hour, earn an 'hour', spend an 'hour', buy an hour.

In practice, however, it doesn't work well, for what are very nonegalitarian reasons. [1] Consider two people who offer their services: one person is a lawyer willing to offer their legal advice, another is someone willing to run errands for you. There are many more people interested in cheap legal advice than in errands, and many more people able to offer errand running than legal advice. This means the lawyer is quickly swamped with interested people.

In one sense, there can be no inflation or deflation with time trade hours: an hour is an hour. The issue is, however, that not all hours are the same. I value an hour spent giving me a medical checkup more highly than one spent giving me a fiddle lesson. If the people who could be offering more valuable services don't think it's worth it, they don't offer their time, and the value I can get by spending a time trade hour decreases. This is kind of how when the price of a loaf bread was fixed bakers would change the size and density in response to changes in the price of flour.

When someone has services to offer that are less valued than the others available, they find few or no buyers, while when someone's services are more desired they can't keep up with demand. Normally we deal with this by adjusting rates, but here we've fixed them. Instead, few trades happen and the market is stagnant.

[1] It also has problems due to what you could call "monetary policy". Everyone gets five hours when they start, and volunteer organizers get ones for organizing. This means that the amount of hours in circulation keeps going up. The capital hill babysitting coop had similar problems in the opposite direction. To fix this, the time trade circle could start requiring dues, where members would pay some number of hours per year to be a member. And they should require you to return your initial five hours when you leave. Because they think of their currency as not subject to inflation, however, this does not seem neccesary to the organizers.