Interesting perspective. You should have in mind though that this is experimental and can be reversed if it isn't going as expected. Also, 20% is not such a huge increase to warrant the debt spiral you are imagining. If things are not going as expected in year one for instance, am pretty sure the witnesses would do the needful and reverse the decision
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I think the witnesses will find it hard to reduce the interest rate.
Reducing the interest rate in a year would result in a massive outflow of HBD and HIVE that the market would find difficult to absorb. Remember, Hive guarantees HBD at $1 minus a 5% fee.
Lowering the interest would lead to a massive flight of HBD from the platform. The price of HBD would fall below $0.95 and people would start converting their HBD into HIVE.
So, lets say the price of HIVE was trading at $0.50. A conversion of a million HBD would create 2 million HIVE that HBD investors would want to dump on the market.
The witnesses are locked in. They have to keep the interest high to avoid the flight of HBD.
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