8 Another reason why deviations from price stability distort decisions and redistribute income lies in the fact that much of our financial system, including many arrangements pertaining to retirement plans, is structured in terms of streams of nominal payments.
9 Absent a background of a steady and predictable inflation rate, the purchasing power of retirement income streams and other payments may turn out to be very different from what was envisioned when they were originally arranged. One long-standing effect of inflation is that it creates incentives that would not otherwise be present to economize on low-interest-bearing money balances.