If the economy is 100% coconuts — all supply is coconuts, all demand is coconuts — then coconuts are all. Business owners sell coconuts in exchange for coconuts in order to acquire more coconuts. Employees are paid in coconuts which they trade for more coconuts. Paying workers more coconuts gives them more of what they want, which is coconuts, that they turn around and spend on coconuts.

That's exactly the problem. At the end of the day, unless you increase production of "stuff" (or coconuts), there isn't going to be magically more "stuff" (or coconuts) to go around just because people are shuffling "stuff" (or coconuts) around.