The top breeders who actually have money, profit from their horses, and sell to OTHER people who have the money.. Shouldn't stop breeding. There is still a market for those types of horses.. Whether the average joe can afford them or not.
While the "okay" breeders, who have generally nice stock, need to cut down. We can't make anyone stop or reduce. If they're making money, they're going to keep on doin' what they do.. Regardless of 'what's out there now'.
While there are tons of grades, people still want them. Like said before, they shouldn't be bred.. But there's a decent demand. I have a grade (four actually) and they're nifty horses. The one I'm selling I got for $600 turned him around and (hopefully) selling for 3k. From where I'm at, if the horses can do the job, someone's going to buy it. Papers or not.