Edited to remove incorrect explanation.

I think, but im not sure, the vests simply transform into steem at 1% per week. THis means that there is more steem than vests, so that is corrected with 2 mechanisms

the first line of defense is other people converting the opposite way

the second line of defense is the steem-iverse changes the ratio of vests to steem produced more in favor of vests to keep the proper amount of money vested.

im not 100% sure about this one... its hard to tell without figuring exactly what happens in the power down black box