I know there are all sorts of rational, straightforward ways to understand recent political developments in America, where the harsh economic environment of the past few years has furnished yet another opportunity for the nation to take a great leap to the right. Still, when I cast my eyes back over the whole chain of events - from the first days of the Obama administration through the Tea Party spectacles to the recent Iowa caucuses - I can't help but suspect that the whole thing is a gigantic lab experiment, designed to demonstrate some postmodern theory about the social construction of reality. Historical facts make no difference, this mad scientist seems to want to teach us. You can have plunging stock markets, mounting unemployment and a gaping class divide, but the forces of ideology and modern marketing can make anything seem to be its opposite.

We the people

Think about it this way. It has now been more than 30 years since the supply-side revolution conquered Washington, since the free-market faith became the dogma of the nation's ruling class, shared by large numbers of Democrats as well as Republicans. We have lived through decades of deregulation, deunionisation, privatisation and free-trade agreements.

And now, after all this has been going on for decades, we have a people's uprising demanding that we embrace the free-market ideology. And this only a short while after that ideology led the world into the greatest economic catastrophe in memory. "Amazing" would be a good word for this. "Unlikely" would also be right. "Preposterous" would be even righter.

When the nation's biggest banks were rescued on generous terms by their pals in the Bush administration's treasury department, it was easy for the new conservatives to see that the episode shed discredit on . . . socialism. When certain well-known proponents of neoclassical economics acknowledged that doctrine's flaws, why, that was clearly the moment for the free-market faith suddenly to make its leap from the pages of scholarly journals to overwhelming popular enthusiasm.

The downturn was, in a very real sense, engineered for us by a culture whose most exalted figure was the trader - and yet, when the time came for the inevitable populist reaction to the disaster, history will forever record that it began in early 2009 with a spontaneous TV rant delivered by a financial reporter from the floor of the Chicago Mercantile Exchange - a rant, to be precise, opposing any federal rescue for foreclosure-facing homeowners which was cheered on by a room full of . . . traders. And the populist uprising's favourite novel? You guessed it: Ayn Rand's Atlas Shrugged, a delicate fantasy about a businessmen's strike which contains a celebrated passage announcing that humanity's highest incarnation is . . . the trader. "A trader is a man who earns what he gets and does not give or take the undeserved" is one of the novel's many preposterous pronouncements.

There is plenty for the American voter to fear these days: unemployment, a recurring recession, the European sovereign debt crisis. But it is as though these realistic fears are then sent through a line of eight-year-olds playing telephone, emerging eventually among the insurgent right as completely new fears that sort of rhyme with the original but are otherwise unrelated. Anxieties mutate constantly into other anxieties and 21st-century catastrophes give rise to 18th-century solutions.

The Great Recession, for instance, is the obvious cause of the right-wing uprising, yet what motivates the uprisers is an extremely worrisome but hard-to-express threat to "freedom". For them, the obvious response to disasters brought on by complex and little-understood financial derivatives is to dress up in the fashions of 1773 and imagine themselves participating in a latter-day Boston Tea Party.

And all the time there is a persistent confusion of the personal with the federal. It is true that Americans took on enormous personal indebtedness over the past decade, yet somehow that knowledge is expressed on the right as a concern about the federal deficit - at last report, the number-one concern among Republican caucus voters in Iowa, a menace so great that it apparently mandates showdowns such as the debt-ceiling catastrophe of last summer. (Those lending to the American government, if bond prices are any indication, feel no such fear.)

In similar fashion, the discrediting of big banks has heightened the respect politicians usually pay to small business, but from there the cult of small business has grown into a great chorus demanding that even the federal government be run like a small business - clearly a preposterous demand that is nevertheless a favourite not only on the right but among consensus Democrats as well.

Manifest destiny

Then there are the perennial worries of the far right, flowering in this springtime of American anxiety. Taxes are widely thought to be confiscatory even though, for individuals at least, they are close to all-time lows. The right frets about Weimar-style hyperinflation, despite its complete failure to manifest itself. Right-wingers are convinced that we face an epidemic of vote fraud; that leftist schemers are preparing to undermine the American way of life; that the Obama administration is honeycombed with Maoists.

They fear just about everything, that is, except the thing itself: the deregulated financial sector that brought us to this sorry pass. And that they will never confront. The only problem with deregulation, the right has persuaded itself, is that it was not permitted to go far enough. It is as perverse as it would be if the public had demanded dozens of new nuclear power plants in the days after the Three Mile Island disaster, or if we had reacted to Watergate by making Richard Nixon a national hero.

Thomas Frank's latest book is "Pity the Billionaire: the Hard Times Swindle and the Unlikely Comeback of the Right" (Harvill Secker, £14.99)