Convincing creditors to take less in payback for our debt is default. Partial default.
The example I gave you was very real and was an offering that was advertised in Time, if I remember correctly. When I saw it, I just tried to take it all in. It was hard to believe.
As far as overstating it, I don’t think it is overstated. Creditors voluntarily take on the risk of our bonds. There will be a price paid for that risk.
Price of bond =
3% historically the rate of borrowing money
+ Adjustment for inflation
+ risk premium
If inflation went up, the rate could go sky high. If the risk increased the rate would go sky high. If both inflation and risk went up at the same time, the rate would skyrocket.
This is really risky especially in the long term.
See my replies #78 & #83.