Replying to this nested reply

You again seems to be back to debt amount, while I talked about debt ratio. Don't forget debt ratio has two components and you still don't prove they are independent.

My comment was intentionally referring to debt amount, that is why I specified it explicitly. The mechanism of incentivizing conversions works by reducing the debt amount. Each 1 SBD of conversions that are so incentivized means that debt amount is reduced by 1 SBD. I also explained elsewhere in my comment above why specifically debt amount is critical (because it determines the danger posed by future price drops).

The system design depends on the assumption that STEEM price, even if negatively correlated with debt reduction, is less-than-proportionately reduced by such debt reduction.

It is debatable. Why do you think so, and can you verify it?

It is not debatable that the system design depends on it. This is clear from the fact that we have no mechanism to directly reduce debt ratio (for example, such a mechanism might attempt to support the price of STEEM by reducing its print rate or perhaps other measures). We only have a mechanism to reduce debt amount, explanations for why it is needed, and instructions when and how to use it. It is clear that the intent is that it actually be used to address debt problems when they are relatively small, not avoided for fear that it might or could contribute to a STEEM price drop.

It is also a reasonable assumption, because at debt ratios that are small numbers in absolute terms (which all of these numbers are, by design), it is clear that reducing debt should not greatly reduce market cap (and therefore price). The disparity between the market cap and the amount of debt for equity exchanged is simply too small to make the magnitude of difference that would be required.

For example, if the network has a value (market cap) perceived by investors to be $X with 5% debt, then reducing that to 4% debt while increasing coin supply by 1% would not suddenly cause investors to value the network much lower than $X (in fact it might be higher, as they would see it one step farther away from bigger problems). To negatively affect the debt ratio, X would have to not just decrease, but decrease by 20%. It is not something that can be fully "verified" as you ask, but it is so reasonable to expect that this will not occur, any theory to the contrary is an extraordinary one.

In fact it is even rather implausible to think that increasing coin supply by merely 1% would crater the market cap by a large amount_even without any perceived positive benefits from the reduced debt_ (including reduced future conversions). Of course, I'm not referring to what would happen to the price if someone instantly dumped that much. Clearly it would drop in that instant. But what would happen after that is investors would recognize that nothing about the future prospects of the system had gotten worse (in fact, better!), and the dump was merely a good buying opportunity (as many are). The price would quickly recover.

Otherwise it would never be possible to usefully reduce debt, and the system wouldn't work (sooner or later, there would be an increase in debt ratio that could not be reduced and the system would certainly fail).

"Do not cross the bridge until you come to it"
Instead I think a more conservative SBD printing policy (e.g. the cut-off point is where debt ratio is 2%) is efficient.

This can not be a solution, by itself, because there is always the possibility of price drops, presenting increasing risk due to a static debt amount turning into a higher debt ratio, even when SDB printing has been slowed or stopped. It is a good "yellow zone" measure to help slow a growing risk and make it easier to reduce debt, but it is not a solution by itself, and still leaves the system highly exposed to additional adverse outcomes on even modest drops of say 50%. It also leaves the system in the degraded state where SBD is not being used to pay out (it is designed to be user-friendly for those not experienced with volatile crypto assets) nor is it being widely distributed to the user base but becomes hoarded. This does not promote the development of services or other aspects of an SBD economy for those users. The "SBD stability" mechanism that switches payout to STEEM was intended as a safety measure, not something that should degrade functionality and be considered "normal" for long periods.