Interesting ideas. I think in any practical system, you'd still need some central authority that determines:

  a basket of basic, thickly traded commodities should be chosen; perhaps a basket of specific amounts of basic elements, thermal and electrical energy, and basic food commodities, priced as delivered to several large markets. 

and

  A control algorithm such as the PID loop used in process control or robotics is employed to adjust K over time.

At a minimum, those aspects of this currency would need to be flexible such that they can be adjusted over time, as needed, to maintain the currency's stability. An inflexible scheme seems like it would be doomed to failure. And yet, any tinkering could also be its demise and undermine its stability and faith in the system. It's a delicate balance.

Ultimately money is a social construct based merely on shared belief. Algorithms can used to enhance and support this social construct, but I do not see how it could wholly replace human/social interventions.