There is an interesting Google Webmaster Help thread of an example of what is called a cyclic redirect. Basically, when you point URL A to URL B and have URL B point back to URL A. It is a cyclic nature and can cause issues for Google and other search engines.

The webmaster came in asking “why is GoogleBot reporting a “Redirect error” on all pages it crawls? promptly saying: not indexed.”

The issue was he had both http://www.max.grenkowitz.net/ and http://max.grenkowitz.net/ resolve to the same page. As JohnMu of Google explained:

The webmaster fixed it, as far as I can tell from his source code, so Google should pick up on the change soon.

But sending Googlebot in circles might not be a great idea.

Forum discussion at Google Webmaster Help.