Likewise, because debt contracts are written in nominal terms, unanticipated inflation transfers wealth from creditors to debtors, adding to the risk of financial contracting and at times posing a significant threat to the financial system itself.
For example, the savings and loan crisis of the 1980s, which cost U.S. taxpayers hundreds of billions of dollars, was to a substantial extent the result of the unexpected inflation of the 1970s, which greatly reduced the real value of mortgage loans made by the S&Ls in an earlier, low-inflation era.