Nationalisation of Northern Rock in the context of Positive feedback loop

Positive feedback (exacerbating feedback, self-reinforcing feedback) is a process that occurs in a feedback loop where the outcome of a process reinforces the inciting process to build momentum. As such, these forces can exacerbate the effects of a small disturbance. That is, the effects of a perturbation on a system include an increase in the magnitude of the perturbation. That is, A produces more of B which in turn produces more of A. In contrast, a system in which the results of a change act to reduce or counteract it has negative feedback. Both concepts play an important role in science and engineering, including biology, chemistry, and cybernetics.

Mathematically, positive feedback is defined as a positive loop gain around a closed loop of cause and effect.That is, positive feedback is in phase with the input, in the sense that it adds to make the input larger.Positive feedback tends to cause system instability. When the loop gain is positive and above 1, there will typically be exponential growth, increasing oscillations, chaotic behavior or other divergences from equilibrium. System parameters will typically accelerate towards extreme values, which may damage or destroy the system, or may end with the system latched into a new stable state. Positive feedback may be controlled by signals in the system being filtered, damped, or limited, or it can be cancelled or reduced by adding negative feedback.