Feedback Loops

Negative feedback pushes a system back toward balance - high margins invite competitors who compress them - while positive feedback amplifies, as deposits fleeing a weak bank weaken it further. Classify which loop governs a situation before acting: fade extremes only where a restoring force exists, and never stand in front of a self-reinforcing spiral. Every claim of a durable high return on capital is a claim that the negative loop has been blocked.

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