This issue has bothered me any many others for a while. The phenomenon remains unexplained to a large degree. 
The price feed producers have obviously lost control. There primary job being attempting to maintain SBD/ USD peg close to 1. The failure is in the magnitude of 1200%. 
My research suggests that there are about 3.5 million SBDs currently. 

STEEM, once was supposed to double ever year. STEEM WHITE PAPER reports:
>Starting with the network's 16th hard fork in December 2016, Steem began creating new tokens at a yearly inflation rate of 9.5%. The inflation rate decreases at a rate of 0.01% every 250,000 blocks, or about 0.5% per year. The inflation will continue decreasing at this pace until the overall inflation rate reaches   0.95%.   This   will   take   about   20.5   years   from   the   time   hard   fork   16   went   into   effect.

Steem supply is finite and the price should go up. As the platform grows and Steem price increases, the whole idea of avoiding volatility by pegging SBD to USD can only backfire, and so it has. 
Let’s see what happens if price of SBD is pulled back artificially: 

# Manipulate interest rate on SBD?
Theoretically you could charge like -50% interest on SBD and that would help SBD price come down, or would it?
This move would only be effective if very  small changes to SBD were needed and if the price was close to the peg. A large cut  means much less SBD in circulation and the price should skyrocket further. 

# Sell a ton of SBD?
The market is easily able to absorb the minuscule amount of SBD. Not enough can be sold to make a difference. 
Sell it, bring the price down and it will start climbing again shortly. This can only be done a few times and only to a temporary effect. 

# If steem prices keep growing,
Then the platform will grow rapidly. 9.5% token inflation per year is not going to be enough. There then will be need for another HF where these issues are addressed. If steem supply does not grow fast enough then steem and sbd prices will sky rocket. 

# Is there a money heaven? Where does the money come from?
From STEEM WHITE PAPER
>Steem Dollars are created by a mechanism similar to convertible notes, which are often used to fund startups. In the startup world, convertible notes are short-term debt instruments that can be converted to ownership at a rate determined in the future, typically during a future funding round. A blockchain based token can be viewed as ownership in the community whereas a convertible note can be viewed as a debt denominated in any other commodity or currency. The terms of the convertible note allow the holder to convert to the backing token with a minimum notice at the fair market price of the token. Creating token-convertible-dollars enables blockchains to grow their network effect while maximizing the return for   token   holders.

We are talking about debt to the system that increases with increase in SBD and  is unsustainable with current price trends. Unsustainable unless massive new investments are coming in and the platform is developing third part apps that generate cash or other services that generate cash. STEEM Inc may be confident in the ability to do so in which case SBD price is inconsequential to an extent. 

# The debt can get overwhelming.
There are prices targets of 35 dollars for 1 SBD by some analysts. This is based on algorithms of platform growth then it is equated to value of the platform. Not that simple but that is where the algo starts. Don’t hold your breath or SBD. If the SBD debt gets too much for STEEM Inc, then all values will crash. I am not expecting this anytime soon. But it can happen. 

# Is there a solution?
To me it makes no sense to try to peg SBD to USD especially if Steem price will not go below 1 USD. SBD by itself is not helpful as liquidity can be added in other ways to the system.For example you may be allowed to instant conversion of SP to USD, but only 10% every 14 days. There is no math or algorithm here that I have generated. Somebody will have to pay me a lot of money to do that. This is just an example. There are multiple ways to add liquidity. The notion of trying to create stability in a crypto by pegging it is an idea that failed. It is thus not a valid idea and the idea and SBD can both be thrown out. Increase the supply of STEEM, decrease the value of SBD and pay off the damn thing and shut off the system. 

# Enjoy
There are tons of smart folks in Steemit. They will figure it out. If debt is under control, then perhaps nothing needs to be done. Either way, until there is action taken, enjoy the returns. Invite me to your party. 

I am looking for loads of discussion here as it affects us all. Let me know what you think. 


<center>![29BF5E72-1CD1-46C6-8038-D8702019CE23.jpeg](https://steemitimages.com/DQmW5PhsT8qpVqe4AHSF1e7d8gziXMi5fAUvQyry26SPb1t/29BF5E72-1CD1-46C6-8038-D8702019CE23.jpeg)</center>
source: pixabay