RE: Why is SBD well below USD?
Even if witnesses will not come up with a solution how to fix SBD, it will to a certain extent fix itself. In the future, when the IMP will rise again, I believe it will be dangerous for traders to hold SBD when the SBD Debt is near 10% and it will be better for them just to sold SBD, thus making it profitable for others to convert to STEEM. I did not know about the feature that the minimum IMP can be set. Now people know and they will pay greater attention to what they hold. But maybe the minimum IMP will not be exceeded in near future, as the credibility fell down really hard. And it is not just about the SBD. There were more situation when the investors cried and I probably do not have to name them for you, because it is not so far in the past.
SBD is designed to recover (back to $1) from this situation as long as Steem doesn't fall to zero, but it is a process that will take some time. How much time no one can know.
I think the only things that help SBD to recover, are the inflation and burning. That's the only two processes that helps SBD (if we do not count with an increase in investing which may not happen) to go back to 1 USD.
But the first process - inflation - must be combined with investing, because when you create tokens out of thin air, it will (at least in the long-term) affect the whole ecosystem, as newly emitted tokens decrease their value. So basically, we can only count with burning that helps SBD.
Conversion is the method. Since none (due to a bug, in fact a little, but it is probably not significant) is being created, as SBD is destroyed by conversions its supply declines and eventually it will get to the point it is repegged at $1.
You are correct that inflation doesn't assure anything. It might result in an increased, decreased, or unchanged total value, depending on market conditions.
Oh, I totally forget to that option, although a few days ago I even converted some SBDs. Thank you for your time and shared knowledge. :)