Part of the problem is, people talk about this thing they call "hoarding" which cuts them off from thinking about this as a spectrum. Instead of talking about "hoarding", as many underconsumptionists would, Keynes talked about demand for liquidity. You could still give money to financial intermediaries - you didn't have to put it in the cupboard - and keep funds relatively more liquid than they would be otherwise. On this spectrum of liquidity, the most liquid is stuffing your mattress. The least liquid is actually building a plant. But there is a spectrum in between.
Liquidity preference influences the interest rate , which also impacts the demand for funds. This is the real problem. A decline in the supply of liquidity also reduces the demand for liquidity through its effect on the interest rate: and that means a fall in output.
Dorman concludes in this way:
"I’m sympathetic with Cowen’s struggle: I see the same difficulties in my economics classes every year. Students can usually see only one or two linkages at a time; it is really hard to see the whole thing as one simultaneous entity. It doesn’t come easy even for professional economists, since writing a set of equations is one thing, but visualizing them on an intuitive level as an integrated system is another.
The fact is, there are a lot more Tyler Cowen’s in this world than Paul Krugman’s, which is one reason why it is so difficult to get a sensible discussion of macroeconomic policy."