Source: Ajith Collonne
Date: July 2009

"Three batches of my postgraduate students were fascinated with the system gap theory. I already cited your System Gap and Credit Cycle Theory in two MBA audiences and it was extremely well received by the students. They are proud of the fact that a Sri Lankan Economist has conceptualized it. In fact, I totally agree with it, as I am convinced of it 100%."

Ajith Collonne
senior lecturer in business economics

Source: Paul Shamgar
Date: April, 2009

The point of departure of your theory from all kind of other schools of economic thought is quite clear in the book. You point out and prove that any contemporary money based economic system can never pay consumers an income exceeding or equal to the value of consumption. And you explain the implications thereof. This is totally new in economics, as far as I know.

Paul Shamgar. ( USA )

Source: Prof. Kumar David
Date: April 12, 2009

Leaving aside excessive detail, I think Senanayake drives home his point well. In the capitalist process of production and circulation, cycles of consumer credit, and therefore accumulation of indebtedness is unavoidable. Actually Senanayake says this is true not only of capitalism, but of any money based economy and this too is largely true.

(This review appeared on April 12, 2009 in the Sunday Island News Paper)

Source: Astride Nazaire
Date: Dec. 2008

You have developed an interesting approach and conceptualized a theory that could bring very useful insight to one of the oldest economic problems, the debt cycle and its linkage to economic crises.(Ms. Nazaire is an Economist cum Diplomat based in USA) Dec. 2008

Source: Kerry A Lynch
Date: Sep. 19, 2008

I reviewed it briefly, and it is too long and too academic for us to publish. AIER has long written about money, credit, and banking problems over the past 75 years, and some of your analysis is very similar to the views we have expressed over the years. It is worthwhile topic.- (Ms. Lynch is the Director of Research and Education at American Institute for Economic Research (AEIR). Having read the final manuscripts she submitted her comments on 09/19/2008)

Source: Robert G. Britt
Date: Sep. 17, 2008

This is economic theory of the highest kind, yet still simple and understandable.

(Mr. Britt is the President of Quantum Tubers Corporation, USA. After reading the final manuscript he submitted his comments on 09/17/2008)

Robert G. Britt/President Quantum Tubers Corporation. ( USA )

Source: Asian Tribune
Date: Feb 20, 2009

Sri Lankan Author Claims He Predicted US Financial Meltdown
Fri, 2009-02-20 14:58
New York, 20 February, (Asiantribune.com): A new book by a Sri Lankan author-- titled 'Indispensable Bad Debt'-- points out that if the government and the Federal Reserve Board had realized that the current economic crisis stemmed from the failure of bridging the economic system gap, they could have invented better monetary and fiscal policy tools to revive the bridging mechanism to stop the financial meltdown.
The New York-based author, Hema Senanayake, says that as far back as December 2007, he wrote to Clete Willems, the chief of staff of Congressman Paul Ryan of Wisconsin , predicting that most likely Citibank, the largest bank in deposits, would collapse.
"I categorially said that Wall Street will not be able to save it," Senanayake told a gathering of diplomats and UN staffers during the launching of his book.
He said he also wrote a second letter in January 2008, addressed to the Federal Reserve Board of Governors, suggesting a formula for the partial cancellation of consumer debt in general.
"They acknowledged my letter and said that my views cannot be simply ignored. But then they went onto ignore my views," Senanayake added.
In his 107-page publication, subtitled 'The Theory of Economic System Gap and Credit Cycle', Senanayake bases his thesis on what he calls the first principle of economics, which justifies the use of fractional reserve banking.
The economic system can never pay consumers an income exceeding or equal to the value of consumption, Senanayake writes. Consumers need to borrow or find some other way to get the balance money required for the consumption.
Accordingly, if some of the consumers save part of their income, others need to borrow more than what is saved in order to put the economic system into equilibrium.
"We need to have a system of banking which can create more credits based on relatively less savings."
Senanayake's economic theory is termed economic system gap and credit cycle, which is defined by the gap between consumer income, a lesser amount, and the value of consumption in any given accounting period.
This theory accounts for the success of Western, money-based capitalism where economic progress occurred as the gap was bridged and fell into terminal recessions when it did not.
Many economists believe economics is not a science. "In physical sciences, we theorize certain behavioral patterns. Similarly, we can theorize certain behaviors of the economy."
For example, he says, the money-based economic system behaves in a very unique, particular way. That behavior means the economic system cannot pay enough money to the consumers, equivalent to the value of consumption offered by the same system, to do the consumption at any given period of time.
So, this is a principle, unique behavior in money-based exchange economies. The said gap exists under normal circumstances in any money-based exchange economy at any level of development.
Here normal circumstances mean that the country carries no excessive trade surpluses in the long run. This economic theory is like any other theory in physical sciences, because it explains a particularly unique behavior in the economic system.
More detailed information is available: www.IndispensableBadDebt.com
- Asian Tribune -