Hey S2S
I know I'm sounding like a broken record, but unless we see according to "how it is" rather than "how we wished it should be" the perception of everything else is distorted.
On your question of if there is anything else besides fiat money:
Short answer yes. One would be a commodity backed monetary fund or physical representative money (non-fiat): http://en.wikipedia.org/wiki/Representative_money or
http://en.wikipedia.org/wiki/Commodity_money
This type of money does three critical things:
1) It does not allow "debt" to be created out of thin air ie fiat debt and money. The money is only a redeemable token of it's actual value, be that of gold bullion, wheat in storage or Apple/IPod. The Egyptians and Babylonians originally had this type of currency.
2) It only allows borrowing of something that already exists, ie that is represented by the token (money bill). For example every bushel of grain gets 10 tokens, every ounce of gold 100 tokens and so on. The commodity value can vary in representative tokens attributable to them according to supply demand. For instance a short supply of wheat in one year will increase the tokens for that amount of product for that time, and in the next year there might be an oversupply, the amount of tokens would be reduced for that amount of wheat.
3) It allows for liquidity in trade. The problem with direct bartering is similar to the problems with peak generation and base-load. We sometimes need something, but we don't have anything to trade with. For instance you grow fresh apples once a year in the summer but you want to buy fresh apples in the winter. What can you "save" to use for trade in the winter? Obviously this only works with transportation from one location to another, but regardless you have nothing of value to give at the time you want to purchase something. Because of that fact there is no trade.
"Fiat" liquidity is what is being artificially pumped into the world markets, like GO described above. The markets are distorted from real value by speculation ie bet. Then they hedge their bets. Their bets become "valuations" of market value and all of a sudden the market "floats". Like a bubble it becomes detached from real tangible value.
The better version is like what the Egyptians did it back in the days of the Pyramids. (BTW they say that Joseph, you know the Technicolour Dream Coat guy, had his finger in it's development back then because of the impending drought!)
The way their system with grain worked like this: A farmer would bring his grain to the community wheat store, for each bushel of wheat he received a special notch on his representative currency "wheat stick" money. He could then take his wheat stick to the markets and trade it for say a bull. The bull seller could then take the wheat stick to the community wheat store and collect his bushel of wheat. Now the bull seller could have also taken this wheat stick to the wheat store 6 months later, or even 5 years later to collect his bushel of wheat. The wheat was effectively his savings held on account, with real and tangible value. (non-fiat)
Now say the farmer wanted to expand his farming activity and has already used up all his seed for his existing lot. He then can go back to the bull seller and ask him to borrow him some of the bushel of wheat that he had sold him. The bull seller asks to be compensated for this "risk" (ie the crop could die) and for the use of his commodity. The farmer agrees to pay back the borrowed bushel for seed plus another bushel on successful harvest of the crop. The bull seller is happy with the arrangement and in trust (contract) returns the wheat stick to the farmer so he can collect the grain for planting in the next season. The farmer is happy with the outcome as he has gained the use of the bull to plow the fields now, which makes his existing lot easier, and his new expansion plans are being realized as well, which well help repaying the tangible debt, with a tangible commodity.
(add point 2) above for another level of trade "lubrication" to allow for seasonal variations in supply and demand etc)
Unlike the current fiat system the representative currency has real tangible value at all levels of society and government. Now a days government is in control of legal tender and it's value, they are "allowed" to print money without any grain in the wheat bank at all. The term bankruptcy originally came from when a bank or store no longer had the ability to pay out it's tokens. Today the Fed steps in and borrows some more into existence from thin air, based on "promises" of payment from government bonds via future tax obligations etc.
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On dissipating into "small communities". I have said this before and I'll say it quickly again. Sustainability is about having the "appropriate size" for the continued cycling of that system. This principle applies to both biological and environmental systems, as it does for political or technological cycles for products and services. The correct size is the balancing point of supply and demand for any given product or service.
For example: To many grain farmers = to much grain produced, not enough earned per bushel of grain to pay the labours enough, to "trade" to survive till next season, farmer can't afford to pay for new bulls for next seasons plow, because he had to trade them to pay for the labours, not enough space in wheat store, and grain goes to waste in the open etc. Of course there is the option of selling it to the wheat store and letting the store owners determine the price for that season, and offset it's grain saving in a following year of drought etc. That way like the electricity grid demand and supply problem, discrepancies can be overcome, and sustainable development can continue. (given that everyone acts honestly!)
These principles can continue with industrialization. Big things can be distributed amongst various communities, as is already done in the car or plane industry (have a look at Smart or Airbus). That way sizable products and services can still exist if necessary.
The community size will depend on the extent and type of productivity. Smaller rural ones for agriculture (between 100-5000 people), larger more "industrialized" communities (but still with agriculture etc mix as well between 10,000-35,000 people).
I believe the first step to sustainability is to get rid of the bulk of over consumption first. Have a look at this footprint graph: http://www.epa.vic.gov.au/ecologicalfootprint/ausFootprint/default.asp
For example only of the concept:
On there food is 28%. Some local or household gardens can at least halve this impact and increase the freshness and quality of the products. Would increase regional biodiversity. Could create more local jobs, or even better less "work" for sustenance and more time for social activities. Would reduce transportation requirements, central storage and refrigeration requirements, pesticide use and improve environment and air quality etc. ie living in a garden.
Household Energy consumption 16%: First course of action is to reduce and then reuse. Biogas from compost/collected organic waste for reliable energy backup, solar for heat directly, and rest for electricity. Add biofuels incl. waste timber etc as necessary to fire Stirling engine CST or wind/hydro depending on resource availability.
Transport is 10%: Once again Biogas for long distance transport and backup, EV for local from CST, wind or similar. Electric buses or Small-EV's.
Thats 54% of the footprint directly replaceable. Further increase goods quality to limit disposal by requiring appliance standards (14%), halve services by replacing government bureaucracy with community responsibilities, including work for the unemployed etc...
Obviously this is only a vague version of what "can be done". Much more detail is required for it to succeed. I don't have all the answers (yet!) for how to achieve this change, nor the fingers for typing everything I can postulate, but the more we look for solutions the more we tend to find. Hopefully you can understand the overall concept of what I mean, and that it is not really necessary to become a rural hillbilly to achieve this. Technological developments will remain as critical as ever, but given the modern form of communication, and the era of the internet, these things can and will still occur effectively, just in a more distributed manner. By the way I don't believe in a "one size fits all" policy, ie something that is so big it doesn't fit at all!! 
Regards
JB (sorry for the long post!)
