I kept on searching and found the answer finally here: https://steemit.com/interest/@sigmajin/understanding-the-steem-economic-system-vests-sbd-steem-dilution-interest-and-all-those-crazy-things

In short:
VESTs are like equity or stock of the compony.
Price of VEST must increase because of the dilution of the "stock" so that the holders wouldn't loose their influence over the company. So every year it takes twice as much STEEM to buy VEST.

Why does the stock dilute? When new" stock" that means VESTS are issued it means that your percentage of the share drops that means you have less influence.

This is how I understand this system so far. Correct me if I am wrong.