S. C. Tsiang defended his views on liquidity and loanable funds in an article for the American Economic Review.
I believe that hoarding or dishoarding is unlikely to be an overwhelming factor in the determination of the interest rate unless the short-term rate has already reached such a low level that it barely compensates for the cost and bother of investing idle funds in short-term assets."1 It is for this reason also that I prefer the more old-fashioned term "idle cash balances" to the term "speculative cash balances," as I believe the main reasons for holding idle balances in excess of transaction requirements are precaution and inertia rather than expectation of future changes in interest rate or in values of long-term assets.
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