Only by cycling in and out of haircut could that ever not be true.

Ok, finally, you start making sense.

You're assuming multiple cycles

No. You are assuming that we go into haircut once per cycle. But we can go into haircut multiple times in the same downtrend. For example, price goes down, we go into haircut, HBD trades at $0.5 (assuming supply of HBD nominally = 20% of hive marketcap now). HBD conversions happen when HBD trades below $0.5 and Hive printing begins.

After half the HBD supply is converted to hive, HBD goes back to $1. However, the HBD marketcap remains the same. It doesn't get halfed. Supply halfed, but price doubled. So marketcap of HBD is still 10% of hive.

What happens if HBD trades below $1 now? More conversions and more hive printing. It can easily excede 10% this way. In fact, with this particular example, the maximum is 15%.

HOWEVER, what happens if hive goes down again, right after the peg was restored?

HBD trades at $0.5 again, half the supply is converted to hive again, HBD is back at $1.

This can repeat infinitely many times. The total inflation in terms of US dollars is less than 10% of the original hive marketcap before the downtred, yes. But inflation in terms of hive is definitely higher than 10% at some point.

You can even see the Steem supply Data, the inflation rate was higher than 20% for 2019 or 2020, if I recall correctly.

Given the base rate is less than 8%, it means at least 12% inflation from HBD. There wasn't multiple cycles.