Steem Dollars are designed to not go below $1, the pressure to bring it down from above $1 is less intense. There are proposals regarding changing this and keeping the Steem Dollar more closely bound to the US Dollar, but I don't think too many people have an issue with their Steem Dollar rewards being worth more than a dollar so the motivation doesn't seem to be there. Bigger fish to fry I suppose.

The reason the money supply increases is to fund the pool to reward various actors in the Steem Game and stimulate economic growth (content creation) without pulling money out of anyone's wallet. Every economy in the world increases their money supply over time. If the productive output of the economy is greater than the growth of the money supply, then the value of the money goes up, even though new money is being created. If the productive output increases in direct proportion to the money supply then the money retains a stable price. If the productive output decreases while the money supply increases the currency loses value. So to answer your question, I suppose all of the people buying Steem on markets believe that the Steem Based Economy will expand at a rate of greater than 9.5% a year. In addition they probably are aware that the inflation rate will decrease over time to .95% so as the Steem Based Economy matures and slows, the money supply growth will slow as well. That being said, as an open source protocol, if a better economic system is proposed, then the crowd can implement it. Perhaps investors understand this as well and are betting not on the fact that the system is perfect, but that it is well designed to adapt and evolve over time.