The word pandemonium was invented by Milton in his 1667 book of poems, Paradise Lost: The First Book. Pandemonium is the location of the high capital of Satan and his Peers. In this place, Satan is by far the most interesting and dynamic character, and his complex motivations for evil are nicely elucidated.

To have the word (pandemonium), Milton combined a couple of Greek roots, pan meaning all + demon, with the Latin - ium ending. So pandemonium is literally the place of all demons. It is a word that we can now trace back to a single person who spun it seemingly out of thin air.

Today, the word is mostly used to mean that “all hell is breaking loose” especially in world financial markets. But, when Milton invented the word, he meant it as the name of a place, not a condition of disorder. For Milton, Pandemonium is clearly the capital city of hell. It is the place where all the demons come together. It is where Satan's triumph is foiled when he and his followers turn into hissing serpents.

You can see the word demon right there in pandemonium. Pandemonium had to do with hell; it was not hell breaking loose; it was a gathering place. In Latin demon meant “evil spirit.” Thus Milton meant pandemonium to mean “the place with evil spirits" (demons). Nowadays, pandemonium commonly crops up whenever a person is describing a chaotic scene. Typical high school students have been heard to use it to describe their lunchroom.

More Info: en.wikipedia.org