Loop A reinforcing loop is one in which the interactions are such that each action adds to the other. Any situation where action produces a result which promotes more of the same action is representative of a reinforcing loop. Figure 6 Figure 6 indicates what happens in a typical savings account. The principal in the savings account interacts with the interest rate and adds to the interest . Note that interest rate is considered to be a constant in this example.
Interest then adds to the principal .
This reinforcing action happens every so many months depending on the period over which the institution computes the interest . The snowball rolling down hill is your signal that the loop is a reinforcing loop. The small graph to the right of principle indicates that the growth of principal is exponential. Typical examples of reinforcing loops are population growth and decline, uncontrolled nuclear reactions, snow balls rolling down hill of course, runs on banks, wall street market crashes, etc. Loop A balancing loop is one in which action attempts to bring two things to agreement.