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I'd actually argue the added STEEM will usually hinder price increases no matter what is done with it...

Until it quits the market, it does. I cannot believe hearing from who sold over 1.2 million STEEM in last two months via conversion (with @smooth-c). You are ignoring what have we done.

It is not convinced about "surely". It may happen, it may not happen.

Fair claim. I would like to correct my statement to "and surely SBD conversion is more likely to be more active if people believe the market is rising"

In a high debt situation, it is important to ensure that debt retirement continues at a significant rate regardless of whether the STEEM price is increasing or not.

Right. But we shouldn't over-incentivize using stakeholders' money when a significant rate of conversion is already taking place. So the conditions for "high discount in rising market" are 1) high debt ratio, and 2) low conversion rate. In rising market (in a mid- or long-run), we need to reduce the degree of interventions and observe how the market is going first. Let the market work first, and if it fails then we intervene.