How does I think it works ?
And how do you thinks it works ??

Yes, you can still commit crimes and fraud, but you don't have to, in the present money system
some people is forced to commit crimes and fraud to eat and have a place to sleep.

We are all part of a local tribe we call friends and family and local peer pressure is all that is needed.

Well, you shouldn't analyze the two features in isolation.

That the is no credit limit means that crimes dosn't pay. It better to use the credit than risk beening cut in a crime.

The time, public record and peer presure will help limit the inflation.

With abstract value measure like $ the value can fluctuate. When you use a concrete standard like time, there is no room for fluctuation. 1 minute is 1 minute for everyone.

Also that there is a public record means
that there is a peer presure, so you might hear for it if your credit is very high.

I totally agree, but I think that the best way to do this is build the balance into the economic system by making a time based community credit system.

I made video about it to googles 10^100 project.
http://www.youtube.com/watch?v=KJ_jyLEvCds