The loanable funds theory and the liquidity preference theory can be reconciled by recognizing that

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The loanable funds theory focuses on the supply and demand of loanable funds over time, resulting in changes in interest rates. The liquidity preference theory focuses on the demand for liquidity in the present moment. However, these two theories can be reconciled by recognizing that a flow over time, such as the supply or demand for loanable funds, can result in a change in a stock, such as the amount of money held in liquidity preference. Thus, both theories can be seen as complementary rather than contradictory.

The Loanable Funds Theory and the Liquidity Preference Theory Can