It started in the late 70s or 80s, I think, when Indians wanted to be called Native Americans. Then black became African American. Suddenly everyone had to have an hyphenated name for their race what about the magna carta?
Mainly when we use it inside since we in America are mainly American as far as our day to day lives go (work, school, ect...) Except in school you can have foreign exchange students which may say what country they are from. In America it would be pointless to say "I am American!" and meet the response "WOW!! AN AMERICAN IN AMERICA!! NO WAY!!!" and as for going to other countries I am hispanic but when I go to Mexico should I say "Hi I'm Mexican!!" no I would not since American is not a race of its own so when we talk to other Americans we decide to say what race we are not telling other people of the same country that we share citizenship with them.
The term Indian is a misconception from when Christopher Columbus dicovered the Americas, thinking he had reached the Asian continent. What your doing is carrying another piece of incorrect information from generation to generation. And i think the basis for this arguement is the minorities in America who have been opressed at one stage or another asking for the right to be classified as American citizens, since they have been there just as long as you.