How do we deal with the mentally unstable in a Libertarian manner?

So true...nearly all the greats in the arts, politics, economics, architecture were considered 'crazy' initially. Whether they were or not is irrelevant to the outcome. We've even had a perfect example in the past couple of months where the economic doomsayers and cranks have proved to be right - in the face of major opposition by the status quo.

And you can't throw out all conspiracy theories with the bath water. The Waco hearings and Lewinsky episode proved that.