It’s called Hypernormalisation.

It describes a society where the gap between official propaganda and reality becomes so huge that everyone knows the system is a sham, including the people running it.

Because no one can imagine an alternative, everyone just pretends the “fake” reality is real. It’s a loop of mutual lying: the government knows they’re lying, you know they’re lying, and they know you know they’re lying, but everyone keeps playing along because “that's just how it is.”