Diuretic
Permanently confused
I suspect that the mutation of the word "liberal" and its associated meanings is down to US politics. I can't remember right now any such denigration in Europe but that doesn't mean it didn't happen of course. In Europe they tend to be a little more specific when using political terms and "liberal" means too many different things to be useful now.
What we call "conservative" today is really closer to "liberal" in the classic sense. It tends to emphasize the unique nature of man, his dignity and rights and independence.
What we call "liberal" today is really closer to "fascist" in the classical sense. It tends to emphasize the needs of society (i.e. the state) over the individual.
And this is the problem when words begin to lose their meanings. I realise that the meanings of words change over time, it's natural that they do. But with respect I differ with your interpretations.
“Conservative” outside of the US has a particular meaning, particularly in British politics where it's the name of a party. The US “Conservative” is , as you say, economically a laissez-faire 19th Century economic liberal such as J.S.Mill but can sometimes be seen as socially conservative as well, which Mill definitely wasn't.
I have to disagree with your use of the term “fascism” and American “liberal” though. I doubt strongly if any American “liberal” is comfortable with the idea of the individual being totally subsumed in the state. I remember reading many descriptions of the Bush Administration taking America into fascism and the opponents of that tendency were American “liberals”. They were aghast at the amount of power the Bush Administration were trying to amass, the opposition in particular to VP Cheney is an example.
Your description of American “liberals” as close to fascist I think is an exaggeration. I think that “liberals” may see the state (government) as being able to contribute to the reduction of misery in society but don't see the state or government as an ends in itself as a true fascist does. To them government is merely a means to an end, the end being a reduction in overall misery in society. The reduction of individual freedom (at least to me and I'm left of centre) is a contributor to misery in society and should not be done without extremely good reasons and within the accepted democratic legislative framework. Acts of fiat by government would be opposed by “liberals”. So I don't agree with your characterisation of American “liberals” as being close to fascists.