answer that i can think of is that, until quite recently, many people in the developed world had taken prosperity for granted and regarded good life as their right. so they wanted to keep on consuming and spending beyond the levels that could be supported by the growth of their economies or income. many people in the developed world thought, rather mistakenly, sovereign debt crisis should be the kind of mishaps that can only occur in the developing economies. at the same time, the capital market seemed to be willing to support this belief as investors were happily buying government bonds of the developed countries at very low interest rates. with what happened in the us and europe in the last five years, we have come to realise that prosperity and good life have to be earned, through hard work and productivity growth, just like what their parents, grandparents and / great grandparents in the western world great grandparents in the western world did in the past. there is now little doubt that prosperity and good life built on the basis of rising indebtedness is unsustainable and is bound to collapse some time, just like sand castles. trap of excessive indebtedness : easy to get into and hard to get out 12. there is another pertinent question on why so many countries do not seem to be able or willing to get out of the trap of high indebtedness or excessive leverage. for one, it is far too tempting to spend, consume now and worry about payment later. that explains why, in addition to public debts, household debts have risen to very high levels all over the world. but there is a limit, largely determined by market forces, on how much debt an individual or a firm can incur. lenders, whether banks, finance companies or bond investors, would look at the creditworthiness of the borrowers and demand high interest rates to cover the credit risks or simply refuse to lend any more if the repayment ability of the borrower is in doubt. moreover, a person with a reasonable mind would need to consider the risk of facing the unpleasant consequence of bankruptcy if he fails to repay his debts on time. the same applies to the owners or managers of companies. however, it is quite different when it comes to government debts. 13. in times of war, the government has no choice but to borrow from every possible source to finance the warfare as it is a question of survival of the nation. we all understand this and bis central bankers ’ speeches so did the peoples of

norman t l chan : who would mortgage their children? text of the digby memorial lecture by mr norman t l chan, chief executive of the hong kong monetary authority, hong kong, 10 april 2015. * * * dr david li, professor ch leong, professor paul tam, professor gabriel leung, professor cm lo, distinguished guests, ladies and gentlemen, it gives me great pleasure to be invited to deliver this year ’ s digby memorial lecture. when professor lo came to me with the invitation, i have thought long and hard on what this very distinguished audience from the medical community would want to hear from the chief executive of the hong kong monetary authority. i hope my remarks today would help stimulate and provoke a more informed discussion in our society on where we want our future generations to go. instead of talking about monetary economics, which may not be of interest to most people, i have chosen a topic that is relevant to all of us, who have become accustomed to prosperity and good lives in a way that our parents and grandparents could never have dreamt of. “ 1942 ” : children sold by parents 2. last year i saw a movie called “ 1942 ”. the movie was based on what happened during the great famine that occurred in the henan province （ 河 南 省 ） and the surrounding areas in china around 1942. the famine was apparently so devastating that millions of people were facing starvation and many of them fled their homes as there was nothing to eat. in the movie, several millions of refugees fled their villages and towns to go to xi ’ an （ 西 安 ）, where they hoped they could find food and help, but most of them did not make it and perished during the long journey. in desperation, many parents sold their children for a tiny sum of money or just a bowl of rice in order to survive a few more days. the movie presented graphically a shocking story, a tragedy of the very harsh reality and unspeakable human sufferings endured by our parents ’ generation not that long ago. 3. well, this very depressing and horrible scene was only a movie. we now live in a comfortable world in which food is abundant and there is no shortage of daily necessities. most of us take good lives for granted. the ugly and unpleasant scenes of parents selling their children as depicted in the movie “ 1942 ” were something of the past and do not seem to have any relevance in modern times. is it so? 4. for those of us who are