I bet every state tries to get every last federal dollar they can. That's what every department and every paid individual in a big company always does, after all...they all try to get the biggest allotment of funds possible from the management...they all try to get more than they did last time. It's a basic motivation of personal gain built into the whole competitive system, after all, at every level.

You have "won" the game if you succeed in getting more money from the higher-ups. You're a "loser" if you don't. ;-)

And where does that eventually lead? If there always has to be more money for everyone, where does it come from? Does this provide any clue as to why the dollar itself is worth a good deal less in real terms with every passing decade?

If you doubled the number of dollars in circulation over a period of time, a dollar would then become worth half as much in real goods. That's what has been occurring.

How has most of the money been created? Through the creation of debt. It was created when a bank made a loan to a person or a company or a government...and the bank didn't give them any real money. No, they gave them a piece of paper, a certificate which stated that they had just been loaned a supposed amount of money that never existed at all except ON that piece of paper. And they also charge interest for the loan. That further enlarges the supply of imaginary money that must appear on the basis of the loan, all created in the form of debt.

The pieces of phony paper fly back and forth, they all get deposited in bank accounts, the interest charges mount up, the bank gets rich on the interest, the amount of imaginary money in circulation keeps increasing exponentially, and the worth of your real physical currency to buy anything decreases in the inverse ratio to the growing supply of imaginary money, and it was all created through debt.

Lending institutions (and many irresponsible borrowers) did it. Governments allowed them to do it. Governments are themselves among the biggest debtors in existence, so the largest banks have them at their mercy, as it were. They also have the general public at their mercy.