I probably don't need to explain why those words were on the minds of language professionals, but no word was deemed as important as the one these collection of linguists declared "Word of the Year" for 2008.

 

That word, of course was "bailout."

 

No argument from me about that. Yet it did make me wonder what the word of the year will be as 2009 draws to a close. I didn't have to think hard, especially after I read a news article a colleague sent me about the Federal Reserve.

 

The central bank's Federal Open Market Committee (FOMC) meets around eight times each year to decide monetary policy. A few weeks later they publicly release a summary ("minutes") of their meeting, and usually the minutes would bore any normal person to tears. But that's not true of the minutes from the FOMC's most recent meeting (December 15-16), when they lowered the Fed funds rate to ZERO. Below I've cut and pasted numerous comments directly from those minutes -- peruse them for a moment and see how quickly the theme makes itself clear.

On the inflation front, headline consumer prices declined in recent months, as energy prices continued to fall and consumer food price increases moderated. After peaking in the third quarter, consumer price inflation moderated in all advanced foreign economies... Headline inflation generally declined across emerging market economies, primarily because of lower food and energy prices and, in some cases, weaker economic activity. In the United States, headline consumer prices declined in recent months while core consumer price inflation slowed further. Measures of inflation expectations continued to fall or hold steady during the intermeeting period. The Committee noted that, in light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, it expected inflation to moderate in coming quarters. ...the expected future path of monetary policy dropped amid data releases that suggested a weaker outlook for economic activity and lower inflation than had been anticipated, along with continued strains in financial markets that weighed on investor sentiment. In response to evidence of a slowdown in economic activity and a rapid waning of inflationary pressures, central banks around the world eased policy sharply. Sovereign bond yields fell, reflecting prospects for lower inflation and lower policy rates for an extended period. The disinflationary effects of increased slack in resource utilization, diminished pressures from energy and materials prices, declines in import prices, and further moderate reductions in inflation expectations caused the staff to reduce its forecast for both core and overall PCE inflation. Core inflation was projected to slow considerably in 2009 and then to edge down further in 2010.

Inflation pressures had diminished appreciably as energy and other commodity prices dropped and economic activity slumped. Looking forward, participants agreed that inflationary pressures looked set to moderate further in coming quarters... Looking forward, participants agreed that inflationary pressures looked set to moderate further in coming quarters, reflecting recent declines in commodity prices and rising slack in resource markets, and several saw risks that inflation could drop for a time below rates they viewed as most consistent over time with the Federal Reserve's dual mandate for maximum employment and price stability. Several participants observed that monitoring measures of inflation expectations for signs of disinflationary dynamics would be especially important going forward. The recent slowing in core consumer price inflation was widespread and likely reflected not only the weak pace of economic activity but also the easing of some earlier cost pressures... Another possible form of communication that participants discussed was a more explicit indication of their views on what longer-run rate of inflation would best promote their goals of maximum employment and price stability. The added clarity in that regard might help forestall the development of expectations that inflation would decline below desired levels... They agreed that maintaining a low level of short-term interest rates and relying on the use of balance sheet policies and communications about monetary policy would be effective and appropriate in light of the sharp deterioration of the economic outlook and the appreciable easing of inflationary pressures. Moreover, inflation would continue to fall, reflecting both the drop in commodity prices that had already occurred and the buildup of economic slack; indeed some members saw significant risks that inflation could decline and persist for a time at uncomfortably low levels.

Apologies for piling up such a tall stack of quotes -- but after all, I'm only reporting. And the D-word ("deflation") actually appeared only once in the minutes, which must be for the same reason that nobody wants to say "Voldemort" in Harry Potter novels (Voldemort is "he who must not be named").