I concur. The problem with the HBD model is that HIVE is subsidizing the peg. It works great when the price of Hive is on the rise. When that happens each conversion creates less and less Hive which contributes to a lower inflation rate but it works in the other direction when the opposite takes place.
Essentially HBD holders can manipulate the price of HBD in order to buy it cheap, convert to Hive, sell it (which pressures the price dowwn)...rinse and repeat.
The witnesses could take action by modifying the interest rate to incentivize holding HBD instead of converting it or they could change the bias factor to deincentivize conversion but they are not taking action,
BTW the manipulation scenario that I described 2 paragraphs above is not theoretical, it has been put in practice systematically on the korean exchange Upbit.
One factor that @aggroed is not considering is that reducing the inflation rate so dramatically will lead to a lot of stake being powered down by making it less attractive to hold it by virtue of a reduced ROI.
Maybe the current inflation rate is too high right now but it is not the biggest factor that is contributing to the declining price relative to BTC (in the long run which asset is not decining against it?).
My stance is that in the long run the only thing that will help sustain the price is a constant demand for resource credits. We are not there yet.