Wait, I just thought of something. One of the most agreed upon reasons for the conspiracy to exist is profit, right? Something about pocketing the budgets that would normally be spent on space travel? (Dunno if that's the popular theory, but I seem to recall reading someone talking about space travel funding being taken for personal gain.)
Yes. In fact, there's a whole thread about the money NASA is playing with right now.
But, in short:
The Russian space agency started the modern version of the conspiracy at some point in the two to three years before they supposedly launched the first satellite into space when they figured out that space travel was impossible.
They had several reasons for doing so:
1. The cold war was in full swing, and "sending" a satellite into space when America couldn't do it was just another way of showing the world that communism was the better system.
2. By getting a large head start on the rest of the world, they would have the advantages as they figured out how to use this new science model.
3. At some point, they could reveal the truth, mocking the rest of the world for not being able to do what they could do.
Now, they faked the satellite launch and began working on the science model, expecting that it would be at least ten years before anyone would challenge their space supremacy.
The USA did the same thing after WW2. We were certain that no one could duplicate the atomic bomb in less than twenty years, when in reality, it took the Russians less than five.
They made the same mistake. The National Advisory Committee for Aeronautics , backed by massive amounts of money, soon found the truth.
How the two nations decided to keep the conspiracy is something that we will never know, unless one of the people that made the deal speaks up. It can be assumed that a deal was cut. Russia got to put the first "man in space" and America got to put the first "man on the moon."
Sometime after that, the people running the conspiracy discovered that besides knowing things no one else did, there was a great deal of money to be made in not actually having a space program. It might have been one of those greedy Americans, or it might have been a corrupt Russian, but the Conspiracy became a billion dollar business, which is shown by the fact that no one, not even the accounting department of NASA or the outside Auditors called in to audit them can say where all their money goes.
As countries came closer to being able to push past the LEO and close to breaking the secret open, either Russian or American members of the Conspiracy would visit the nation and induct their people into the conspiracy.
There are several ways of doing this.
1. Greed. The Conspiracy is a multi-billion dollar business and everyone has a price.
2. Blackmail. Many people, not all mind you, but many of them have something in their past to hide. When you can draw on the combined intelligence resources of the USA and Russia, you can find those little secrets.
3. Simple threats. If nothing else works, a simple promise to kill a man's family can work wonders, especially if you have more than enough power to do it.
There are a few more possible ways to coerce people, and I'm certain that you can all think of a couple. The point here is that as each country reaches the point that they are coming close to the limits of space flight, somewhere around the LEO, they are brought in line with the conspiracy by one means or another.
Over the last couple of decades, the conspiracy has had to expand, to include some people that have little to do with NASA or space.
There is also a second possible reason for the conspiracy, a second hypothesis.
We claim that the primary motive for it is money... but what if it's not?
WW2: The Government built bomb shelters in many areas... but only to protect a selected segment of the people.
During the Cold War, they did the same thing.
All of the end time scenarios that the government has is based on the rather simple idea that they can't save everyone.
So, if space flight is not possible, that means that the human race is stuck on this planet, no matter what, correct?
The government looks at that and then looks at rising population counts. Even China, with its draconian birth control policy, is rapidly running out of room.
In three to four more generations, the earth's resources will no longer be able to handle the human population without a very significant breakthrough or some form of relief.
When a population gets too big, ways are found to relief the stress. War, Famine, Plague, whatever.
The Conspiracy people are planning ahead, using the funds from the Conspiracy to built secret havens, places to protect the percentage of the people that they think should be saved.
That they will also choose the people that get saved, and will probably include a majority of their families is merely a bonus.
In this model, that missing money is actually going to building and supplying the shelters that they will move into when whatever disaster afflicts the world strikes.
Now, these are not yet theories... merely hypothesizes. When I have enough evidence to project one above the other, it will be the theory.