Reinforcing / balancing loop

A reinforcing loop amplifies itself each cycle — bigger asset stock, more yield, reinvested, bigger stock: compounding is the canonical example. A balancing loop pushes back against growth — lifestyle inflation narrowing your savings valve, fees and taxes draining the tank, inflation eroding real value. Building wealth is practically the art of strengthening one reinforcing loop while plugging four balancing ones.

First used in: 0.2 · Your money as a system