There has been past events of inflation without climbing out of stagnation. It's called stagflation [0] which occurred in late 70s in the US.
I don't believe the macro economy is random. But I don't believe it can be understood to any certainty worthy of the quantitative methods ascribed to it by modern economists. If you look at empirical evidence (regression) for what most consider economic truths, you'll see a shockingly low R^2.
That being said, I think some economic truths can be discovered through logic. For instance, all else being equal, an increase in money supply will result in higher prices. As Milton Friedman said: "Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output".
I can't think of an example of destructive inflation without the increase of money supply by a central authority. So certainly there must be some link. So maybe we can say inflation is (almost) always associated with an increase in money supply but an increase in money supply is not always followed by inflation.
I think part of the reason is that history always seems compressed when you look back, but the present seems to stretch forever.
So you can look back at a 5-7 year period in the 1970s and say 'look, that's where inflation occurred'. But living through a seven year period feels like a long time.
The final point is that inflation statistics are calculated in different ways now. If you look at inflation measures not linked to a 'basket of goods' type measure, there is plenty to see. The breakouts in collectible markets in the last year or two certainly point to strong inflation.
But on the whole the government response is not as stupid as it was in the 1970s, when they did things like put in price controls and things like that. There was a big deflationary hole to fill in first.
I don't think we are anywhere near out of the woods yet.
I don't believe the macro economy is random. But I don't believe it can be understood to any certainty worthy of the quantitative methods ascribed to it by modern economists. If you look at empirical evidence (regression) for what most consider economic truths, you'll see a shockingly low R^2.
That being said, I think some economic truths can be discovered through logic. For instance, all else being equal, an increase in money supply will result in higher prices. As Milton Friedman said: "Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output".
I can't think of an example of destructive inflation without the increase of money supply by a central authority. So certainly there must be some link. So maybe we can say inflation is (almost) always associated with an increase in money supply but an increase in money supply is not always followed by inflation.
I don't know why it hasn't happened in this case.
[0] http://en.wikipedia.org/wiki/Stagflation