A simulation of electrocortical activity based upon coupled local aggregates of excitatory and inhibitory cells was modified to include rapid dynamic variations of synaptic efficacy attributable to reversal potentials and related effects. The modified simulation reproduces the rhythmic phenomena observed in real EEG, including the theta, alpha, beta and gamma rhythms, in association with physiologically realistic pulse densities. At high levels of cortical activation, generative activity with a 40-Hz center frequency emerges, suggesting a basis for the occurrence of phase changes and "edge of chaos" dynamics. These local oscillation properties complement the dissipative travelling wave and synchronous oscillation effects attributable to longer range excitatory couplings, as previously demonstrated in related simulations. Results of variation of parameters provide a first approximation to the anticipated effects of slow physiological time variations in gains and lags, and some predictions of the model are described.