MMT takes the view that monetary policy is largely useless as a stabilisation device, and what is known as the horizontal circuit (“bank money”) should be left to operate as a market rather than being manipulated all the time. Therefore you leave the base rate at the natural rate of 0% and stop artificially trying to hold it above that, particularly stop moving it around.
What that means is that government stops paying banks “welfare on reserves” payments. No Interest on Reserves. No Bond Coupons. Any income banks earn they have to get by discounting collateral in the private economy and charging for that service (aka making loans).
System stabilisation can then be done using the vertical circuit (“central bank money”) which is added and removed as required to commercial bank’s balance sheets and forcibly creates additional bank deposits in the hands of individuals - because bank money is pegged one-to-one to central bank money.
The result is that the bank money system operates within a containment vessel defined by fixed banking policies, not ones that change month to month, and the banking system ebbs and flows within the policy boundaries, with the government’s vertical system countercyclically matching the ebb and flow.
This is where the Job Guarantee sits. The wage is paid with vertical money and matches the ebb and flow of bank money spending countercyclically. But importantly it does the same thing on the production side with labour hours - injecting and removing labour hours countercyclically with private and public sector demand keeping labour hours near constant relative to the working population.
A guaranteed alternative job replaces bank credit manipulation as the stabilisation process. The production system gets a change in output, not a dead loss. You get income in your pocket, not a debt millstone around your neck.
And that’s how you get to true full employment and price stability within an economic system where demand is satisfied.