“Keep Calm and Carry On” the poster orders, its message somewhat at odds with its presentation: white text set in imperious capitals in a distinctively British typeface against a background of panic-button red. You might be familiar with the slogan from the signature poster or from its many incarnations on T-shirts, mugs, tea towels and other products. It also appears on the cover of a recently published book of motivational quotes. Online store Remo first started selling the “Keep Calm” posters in Australia in 2007; since then, the slogan has become enormously popular here as well as in the US, the UK and, surprisingly enough, Germany.

When I was having my own poster framed just before Christmas, along with a second one I’d bought as a gift for my mother, the framer laughed and pointed to another two of the posters that he had just finished for another customer.

“What’s it all about?” he asked, and it was hard to find the right answer. The usual explanation for the popularity of the slogan – that it is a reassuring message for our troubled times – doesn’t quite seem to account for the strange mix of nostalgia, naivety and irony it projects.

I first came across the poster in the home of a friend whose walls are otherwise graced by documentary images of political rallies and leftist stencil art. There it had a certain tongue-in-cheek aura. In a telling mistake, a photographer visiting my house asked if the poster was an artwork by Banksy, the British street artist renowned for his humorous inversions of state propaganda. In some contexts it even looks like something George Orwell might have come up with in one of his lighter moments.

It’s hard to believe that it isn’t a clever parody, but part of the reason for the success of “Keep Calm” must lie in its history as an actual piece of state propaganda. Artist Maira Kalman said of the poster, “During WWII people looked at this poster. Not a bad thing to remember under any circumstances.”

But, in fact, during World War II virtually no one saw it. The story of the poster itself includes a delicious irony: the poster may appeal to contemporary audiences, but the propaganda effort it was to contribute to was so unsuccessful and hated in its time that it was abandoned and millions of the posters were destroyed, according to Dr Bex Lewis, an academic who works on British war propaganda. “Keep Calm and Carry On” was the third in a series of patriotic slogans produced by the British Ministry of Information during World War II, intended to convey a message of reassuring authority and inspiration from the King (hence the image of the crown at the top of the slogan, the only pictorial element in the design). The first, less rhetorically masterful poster read, “Your Courage, Your Cheerfulness, Your Resolution will Bring Us Victory” and hundreds were pasted up on town walls and displayed in shop windows in 1939. The overwhelmingly negative response to the campaign seems to have to do with the patronising, authoritarian tone and the division between You and Us, suggesting victory for someone else – the King, the ministry – rather than for the people whose cheerful energy would bring this about.

In 2000, two bookshop owners in Northumberland discovered a copy of the “Keep Calm” poster in a box they bought at an auction and hung it in their shop. The response from customers was so extraordinary that they started printing copies to sell and have since sold over 40,000. At first this story of the poster’s provenance sounded to me like a hoax – what are the chances that just one would survive, and be unearthed at just the right moment for its message to have undergone a full transmutation from repellant top-down propaganda to charming, out-of-date kitsch? But it seems to be true.

The slogan’s slippery brilliance partly lies in the range of meanings it is able to hold, unhinged from its original context. A friend of mine owns the poster because she likes the way it distills Buddhist wisdom: Zen in the guise of jolly British resolve. Perhaps the poster reassuringly suggests that someone behind the scenes (not the Crown anymore, but something like it) is in control, however screwed up everything seems.

Or perhaps it conveys the opposite: the absolute ridiculousness of that very idea, especially in the wake of a financial meltdown brought about by a lack of sensible controls, and at the beginning of a global environmental crisis that seems impossible to tackle. Perhaps it’s an unstable mix of all this: a nostalgic desire for a time when it felt as though someone was holding the reins, combined with a knowing smile at the fact that this time never existed.

The many parodies of this slogan further testify to its genius as a rhetorical construction: Olly Moss inverts the crown in “Now Panic and Freak Out”, especially popular as a T-shirt right now. “Get Creative and Make Things”, by designer Matt Jones, with a green background and the spokes on the crown replaced by spanners, has also become a classic.

Many variations exemplify the slogan’s suitability as commodified nostalgia for our time of financial crisis – “Keep Calm and Spend More”, “Keep Calm and Stay in Debt” – but the last word probably goes to the version by cartoonists Modern Toss, printed on a canvas shopping bag: “Buy More Shit or We’re All Fucked”.