This is a summary of what was covered. Unanticipated, accelerating inflation benefits borrowers who pay make payments at low real interest rates. That means inflation gives the borrower more purchasing power, and takes it away from the lender, unless the lender does something to compensate, to avoid the loss in purchasing power. Lenders who don't want to get burned by rising prices try to correctly forecast the inflation rate, and then raise interest rates to cover the risk of inflation eroding away the purchasing power of the interest payments and principal they will receive in the future. In the bond market, the same results happens according to a more complicated process.
Bond traders get very nervous and demand for bonds falls off, which pushes up interest rates.
When people stop buying bonds, their price goes down. In one sense, stockholders are better off in an era of inflation. Common stock prices have a strong tendency to rise sufficiently in the long run to stay ahead of inflation. During this century, while the U.S. price level has increased more than 900 percent, the value of common stocks has increased even more. The reason stock prices keep up with inflation is because these prices follow corporate profits, which tend to increase over time with the price level.