Initially, the price of everything will drop substantially as interest and profit are removed from the economy. Then, after all cost adjustments have been made, prices will stabilize. Since the new prices will be determined entirely by labour hours, only a change in labour inputs will affect them. If natural resources become more difficult to find and process, prices would rise. If automation reduces the need for human labour, prices would fall. But all speculative, subjective pricing will finally be gone forever.
All major assets like houses, cars, boats, etc. will be given a durability rating when they are designed and manufactured. The rating will identify how long each asset is expected to last under normal conditions. Rather than paying the entire production cost of a major asset upfront, consumers will only be required to pay the monthly depreciation costs of any major assets they use.
Using current dollar values as an example, if the house you occupy cost $270,000 to build and it was rated to last 60 years, the monthly depreciation cost would be $270,000 divided by 60 years, divided by 12 months (per year), which equals $375 per month. To use and depreciate the house, you would be required to pay just $375 a month. Not bad considering a traditional 25 year mortgage on a $270,000 house with no down payment would currently cost you about $1,575 a month (at 5% interest). Similar savings would apply to your cottage, motor home and car payments.
The cost of using commercial assets will fall just as dramatically as housing costs. Switching to public capital will generate enormous savings on buildings, machinery and equipment. Time-based pricing will ensure that all of these savings are passed along to consumers in prices.
But the changes in the money system would also cause changes in the markets. Quality would become a much more important factor since better quality assets would have a longer durability rating. To see how profoundly this would influence things, let's return to the example above. If the house you occupy cost $270,000 to build but it was rated to last 100 years, the monthly depreciation cost would be $270,000 divided by 100 years, divided by 12 months (per year), which equals $225 per month. So a better quality home would actually cost less to use than a "economical" home in our current marketplace. Even if the additional cost of better quality materials and methods raised the total production cost of a 100-year house to $360,000, the monthly depreciation cost would be only $300... still $75 less than the 60-year $270,000 house above.
The savings above ignore the fact that all land would be in the public domain, so the lot prices attached to housing would be much cheaper, and without interest and profit in the supply chains, a $270,000 house would be quite an expensive home. Monthly depreciation costs on a more modest home, or an apartment, could easily be under $200.
Workers will now have enough purchasing power to buy everything produced in the economy. But some of the total production will not be for sale. Commercial assets like factories and equipment will not be for sale. Public assets like hospitals and schools will not be for sale. Also, public services like education and healthcare will be free. Accordingly, purchasing power (demand) will exceed supply.
Our current economic system uses profit, interest and taxation to reduce consumer demand. Profit and interest inflate prices and devalue the currency, so consumers can't afford to buy as much. Taxation transfers purchasing power to the government, so consumers can't afford to buy as much. But none of these tools ever extinguish any money. They only transfer purchasing power, not eliminate it, so they are never very effective.
To slow the consumption rate of scarce resources and to make recycling more affordable, a resource usage fee will be added to the price of every good and service produced. Resource usage fees will be based upon two primary considerations. The first will be the annual depletion rate of the total remaining supply of a particular resource. The depletion rate for a completely renewable resource would be 0%. The depletion rate for a scarce or rapidly declining resource could run as high as 50%. The depletion fee would be calculated by multiplying the total labour cost of supplying the resource by the depletion rating. If it took 10 labour hours to produce a barrel of crude oil, and the depletion rate for crude oil was set at 50%, then a barrel of crude would cost 15 hours. The second consideration will be based upon the environmental impact of utilizing a resource. Impact assessments will include both the environmental cost of resource extraction & processing and any final waste disposal costs. The environmental fee will be added to the depletion fee to calculate the resource usage fee.
Resource usage fees will be integrated into prices directly by manufacturers themselves. High resource usage fees will encourage manufacturers to develop more environmentally sustainable production strategies. Retail prices will include labor costs, asset depreciation costs and resource usage fees. Nothing else will be added. Asset depreciation costs and resource usage fees will remove a lot of the excess purchasing power in the economy. The key word here is remove. These tools will extinguish the money that workers create, not simply transfer it to another spender. Money will not recirculate. If money doesn't recirculate, and there is no artificial system of debt to sustain consumption, when resources cost more than what was paid out to produce them, then consumption rates will fall accordingly.
Some excess purchasing power is necessary and beneficial to society so that people can save for leisure time and their retirement. Without debt and consumer loans to inflate the money supply, saving will be absolutely essential. Some people may choose to work for a year or two, then travel or just relax for a while. Saving will be far more popular, and much easier, once people are paid fairly for their time.
In a truly labour-based, debt-free economy prices will not soar, inflation will not skyrocket, our currency will not devaluate. In fact, exactly the opposite will happen. Prices will drop, inflation will stop and the value of our currency will stabilize. People who don't understand the concept, or who have a vested interest in maintaining the status quo, may still try to convince you otherwise, but it is structurally impossible to inflate values in a time-based economy. There are only 24 hours in a day and if you try to add a 25th hour people will notice.
