Originally Posted by Idun
Actually, no, I don't think Loki is crazy. He has in his mind, as time has progressed, created a version of what's true. Most wouldn't agree with him on that view, but it is still his view, the way he feels is right. It's quite common, this lying to oneself, and as long as someone is clinging to such a view, that individual will keep acting accordingly. Doesn't make them crazy IMO, though when it's concerning a god, the result can be spectacular. To say the least.
There could also be a case of Loki having knowledge of all sorts of alternate realities and maybe he gets that mixed up in his head because he doesn't know which reality pertains to his actual timeline.