If we look at the worst case, the French Revolution, it started with a deeply indebted Louis XVI.

Jacques Necker tried to restore investor confidence by publishing the Compte rendu au roi in 1781, which hid key expenses. This allowed the king to continue borrowing but did not fix the fiscal crisis.

Attempts at tax reform failed due to resistance from the nobility and the clergy who paid nothing, leading Louis XVI to convene the Estates-General of 1789. Which triggered a series of events leading to the revolution.

Revolutionary leaders seized Church lands and issued assignats to fund the state, but overissuance caused inflation. More durable financial stabilization came later under Napoleon Bonaparte through institutional reforms and, in part, revenues from military campaigns. He looted much of the wealth of the Italians who he “freed” from the Austrians.

The insight I get is that the debt is similar to NIMBY. Local interests benefit from an ever increasing debt, but collectively we are all hurt by it.