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23 sats \ 1 reply \ @cryotosensei OP 14 Jan \ parent \ on: reinforcing feedback loop econ
Cool. You had me googling ‘fiscal death spiral’!
Isn’t it a bad thing though? In terms of government debt - When a government issues more debt than it can pay back, and interest payments grow larger. Why is it considered a positive feedback loop?
Thanks in advance!
"Positive feedback cycles" aren't a good/bad category. Rather it's a description of the dynamics of a system.
Positive feedback just means the system reinforces or strengthens the effect: in a fiscal death spiral, the attempts to mitigate the problem actually make it worse.
Negative feedback means the system pushes back on the process. Sticking with fiscal metaphors, something like tax evasion is a negative feedback on raising taxes: i.e. states can't just raise taxes to increase revenue, because of the negative feedback from tax evasion.
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