The monsoon had woven thick skeins of mist over the central highlands of Vietnam. I was a young war correspondent, bivouacked in the village of Tuylon with a unit of US marines whose orders were to win hearts and minds. "We are here not to kill," said the sergeant, "we are here to impart the American Way of Liberty as stated in the Pacification Handbook. This is designed to win the hearts and minds of folks, as stated on page 86."

Page 86 was headed WHAM. The sergeant's unit was called a combined action company, which meant, he explained, "we attack these folks on Mondays and we win their hearts and minds on Tuesdays". He was joking, though not quite. Standing in a jeep on the edge of a paddy, he had announced through a loudhailer: "Come on out, everybody. We got rice and candy and toothbrushes to give you."

Silence. Not a shadow moved.

"Now listen, either you gooks come on out from wherever you are, or we're going to come right in there and get you!"

The people of Tuylon finally came out and stood in line to receive packets of Uncle Ben's Long Grain Rice, Hershey bars, party balloons and several thousand toothbrushes. Three portable, battery-operated, yellow flush lavatories were kept for the colonel's arrival. And when the colonel arrived that evening, the district chief was summoned and the yellow flush lavatories were unveiled.

"Mr District Chief and all you folks out there," said the colonel, "what these gifts represent is more than the sum of their parts. They carry the spirit of America. Ladies and gentlemen, there's no place on earth like America. It's a guiding light for me, and for you. You see, back home, we count ourselves as real lucky having the greatest democracy the world has ever known, and we want you good folks to share in our good fortune."

Thomas Jefferson, George Washington and Davy Crockett got a mention. "Beacon" was a favourite, and as he evoked John Winthrop's "city upon a hill", the marines clapped, and the children clapped, understanding not a word.

It was a lesson in what historians call "exceptionalism", the notion that the United States has the divine right to bring what it describes as liberty and democracy to the rest of humanity. That this merely disguised a system of domination, which Martin Luther King described, shortly before his assassination, as "the greatest purveyor of violence in the world", was unspeakable. As the great people's historian Howard Zinn has pointed out, Winthrop's much-quoted description of the 17th-century Massachusetts Bay Colony as a "city upon a hill", a place of unlimited goodness and nobility, was rarely set against the violence of the first settlers, for whom burning alive some 400 Pequot Indians was a "triumphant joy". The countless massacres that followed, wrote Zinn, were justified by "the idea that American expansion is divinely ordained".

Not long ago, I visited the American Museum of History, part of the celebrated Smithsonian Institution in Washington, DC. One of the popular exhibitions was "The Price of Freedom: Americans at War". It was holiday time and lines of people, including many children, shuffled reverentially through a Santa's grotto of war and conquest where messages about their nation's "great mission" were dispensed. These ­included tributes to the "exceptional Americans [who] saved a million lives" in Vietnam, where they were "determined to stop communist expansion". In Iraq, other true hearts ­"employed air strikes of unprecedented precision". What was shocking was not so much the revisionist description of two of the epic crimes of modern times as the sheer scale of omission.

"History without memory," declared Time magazine at the end of the 20th century, "confines Americans to a sort of eternal present. They are especially weak in remembering what they did to other people, as opposed to what they did for them." Ironically, it was Henry Luce, founder of Time, who in 1941 divined the "American century" as an American social, political and cultural "victory" over humanity and the right "to exert upon the world the full impact of our influence, for such purposes as we see fit and by such means as we see fit".

None of this is to suggest that vainglory is exclusive to the United States. The British presented their often violent domination of much of the world as the natural progress of Christian gentlemen selflessly civilising the natives, and present-day TV historians perpetuate the myths. The French still celebrate their bloody "civilising mission". Prior to the Second World War, "imperialist" was an honoured political badge in Europe, while in the US an "age of innocence" was preferred. America was different from the Old World, said its mythologists. America was the Land of Liberty, uninterested in conquest. But what of George Washington's call for a "rising empire" and James Madison's "laying the foundation of a great empire"? What of slavery, the theft of Texas from Mexico, the bloody subjugation of central America, Cuba and the Philippines?

An ordained national memory consigned these to the historical margins and "imperialism" was all but discredited in the United States, especially after Adolf Hitler and the fascists, with their ideas of racial and cultural superiority, had left a legacy of guilt by association. The Nazis, after all, had been proud imperialists, too, and Germany was also "exceptional". The idea of imperialism, the word itself, was all but expunged from the American lexicon, "on the grounds that it falsely attributed immoral motives to western foreign policy", argued one historian. Those who persisted in using it were "disreputable purveyors of agitprop" and were "inspired by the communist doctrine", or they were "Negro intellectuals who had grievances of their own against white capitalism".

Meanwhile, the "city on the hill" remained a beacon of rapaciousness as US capital set about realising Luce's dream and recolonising the European empires in the postwar years. This was "the march of free enterprise". In truth, it was driven by a subsidised production boom in a country unravaged by war: a sort of socialism for the great corporations, or state capitalism, which left half the world's wealth in American hands. The cornerstone of this new imperialism was laid in 1944 at a conference of the western allies at Bretton Woods in New Hampshire. Described as "negotiations about economic stability", the conference marked America's conquest of most of the world.

What the American elite demanded, wrote Frederic F Clairmont in The Rise and Fall of Economic Liberalism, "was not allies but unctuous client states. What Bretton Woods bequeathed to the world was a lethal totalitarian blueprint for the carve-up of world markets." The World Bank, the International Monetary Fund, the Asian Development Bank, the Inter-American Development Bank and the African Development Bank were established in effect as arms of the US Treasury and would design and police the new order. The US military and its clients would guard the doors of these "international" institutions, and an "invisible government" of media would secure the myths, said Edward Bernays.

Bernays, described as the father of the media age, was the nephew of Sigmund Freud. "Propaganda," he wrote, "got to be a bad word because of the Germans . . . so what I did was to try and find other words [such as] Public Relations." Bernays used Freud's theories about control of the subconscious to promote a "mass culture" designed to promote fear of official enemies and servility to consumerism. It was Bernays who, on behalf of the tobacco industry, campaigned for American women to take up smoking as an act of feminist liberation, calling cigarettes "torches of freedom"; and it was his notion of disinformation that was deployed in overthrowing governments, such as Guatemala's democracy in 1954.

Above all, the goal was to distract and deter the social democratic impulses of working people. Big business was elevated from its public reputation as a kind of mafia to that of a patriotic force. "Free enterprise" became a divinity. "By the early 1950s," wrote Noam Chomsky, "20 million people a week were watching business-sponsored films. The entertainment industry was enlisted to the cause, portraying unions as the enemy, the outsider disrupting the ‘harmony' of the ‘American way of life' . . . Every aspect of social life was targeted and permeated schools and universities, churches, even recreational programmes. By 1954, business propaganda in public schools reached half the amount spent on textbooks."

The new "ism" was Americanism, an ideology whose distinction is its denial that it is an ideology. Recently, I saw the 1957 musical Silk Stockings, starring Fred Astaire and Cyd Charisse. Between the scenes of wonderful dancing to a score by Cole Porter was a series of loyalty statements that the colonel in Vietnam might well have written. I had forgotten how crude and pervasive the propaganda was; the Soviets could never compete. An oath of loyalty to all things American became an ideological commitment to the leviathan of business: from the business of armaments and war (which consumes 42 cents in every tax dollar today) to the business of food, known as "agripower" (which receives $157bn a year in government subsidies).

Barack Obama is the embodiment of the "ism". From his early political days, Obama's unerring theme has been not "change", the slogan of his presidential campaign, but America's right to rule and order the world. Of the United States, he says, "we lead the world in battling immediate evils and promoting the ultimate good . . . We must lead by building a 21st-century military to ensure the security of our people and advance the security of all people." And: "At moments of great peril in the past century our leaders ensured that America, by deed and by example, led and lifted the world, that we stood and fought for the freedoms sought by billions of people beyond their borders."

Since 1945, by deed and by example, the US has overthrown 50 governments, including democracies, crushed some 30 liberation movements and supported tyrannies from Egypt to Guatemala (see William Blum's histories). Bombing is apple pie. Having stacked his government with warmongers, Wall Street cronies and polluters from the Bush and Clinton eras, the 45th president is merely upholding tradition. The hearts and minds farce I witnessed in Vietnam is today repeated in villages in Afghanistan and, by proxy, Pakistan, which are Obama's wars.

In his acceptance speech for the 2005 Nobel Prize for Literature, Harold Pinter noted that "everyone knew that terrible crimes had been committed by the Soviet Union in the postwar period, but "US crimes in the same period have been only superficially recorded, let alone documented, let alone acknowledged, let alone recognised as crimes at all". It is as if "It never happened. Nothing ever happened. Even while it was happening, it wasn't happening . . . You have to hand it to America . . . masquerading as a force for universal good. It's a brilliant, even witty, highly successful act of hypnosis."

As Obama has sent drones to kill (since January) some 700 civilians, distinguished liberals have rejoiced that America is once again a "nation of moral ideals", as Paul Krugman wrote in the New York Times. In Britain, the elite has long seen in exceptional America an enduring place for British "influence", albeit as servitor or puppet. The pop historian Tristram Hunt says America under Obama is a land "where miracles happen". Justin Webb, until recently the BBC's man in Washington, refers adoringly, rather like the colonel in Vietnam, to the "city on the hill".

Behind this façade of "intensification of feeling and degradation of significance" (Walter Lippmann), ordinary Americans are stirring perhaps as never before, as if abandoning the deity of the "American Dream" that prosperity is a guarantee with hard work and thrift. Millions of angry emails from ordinary people have flooded Washington, expressing an outrage that the novelty of Obama has not calmed. On the contrary, those whose jobs have vanished and whose homes are repossessed see the new president rewarding crooked banks and an obese military, essentially protecting George W Bush's turf.

My guess is that a populism will emerge in the next few years, igniting a powerful force that lies beneath America's surface and which has a proud past. It cannot be predicted which way it will go. However, from such an authentic grass-roots Americanism came women's suffrage, the eight-hour day, graduated income tax and public ownership. In the late 19th century, the populists were betrayed by leaders who urged them to compromise and merge with the Democratic Party. In the Obama era, the familiarity of this resonates.

What is most extraordinary about the United States today is the rejection and defiance, in so many attitudes, of the all-pervasive historical and contemporary propaganda of the "invisible government". Credible polls have long confirmed that more than two-thirds of Americans hold progressive views. A majority want the government to care for those who cannot care for themselves. They would pay higher taxes to guarantee health care for everyone. They want complete nuclear disarmament; 72 per cent want the US to end its colonial wars; and so on. They are informed, subversive, even "anti-American".

I once asked a friend, the great American war correspondent and humanitarian Martha Gellhorn, to explain the term to me. "I'll tell you what ‘anti-American' is," she said. "It's what governments and their vested interests call those who honour America by objecting to war and the theft of resources and believing in all of humanity.

"There are millions of these anti-Americans in the United States. They are ordinary people who belong to no elite and who judge their government in moral terms, though they would call it common decency. They are not vain. They are the people with a wakeful conscience, the best of America's citizens. They can be counted on. They were in the South with the civil rights movement, ending slavery. They were in the streets, demanding an end to the wars in Asia. Sure, they disappear from view now and then, but they are like seeds beneath the snow. I would say they are truly exceptional."