The fact that 7% is considered an unsustainable level is either a commentary on the sheer magnitude of sovereign debts or a commentary on how anchoring influences psychology in a low interest rate environment, because after all 7% isn't that high of an interest rate in a historical context.
The chart below is a chart of US 10 year treasury yields since 1953. The red line is the 7% level. As the chart shows, between 1970 and 1995 US treasury bonds spent a great deal of time (nearly 25 years) above the 7% level, and even spent some time at double that rate. But somehow the US government didn't need a bailout during that time period. What would happen if interest rates returned to those levels?
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