Are audiophiles still out of their minds?

Damn, Ive been going about this all wrong......you mean my wife should be asking to handle my cords? If only! :)

Im sure if I had a six figure system I wouldn't think twice about spending big bucks on cables. I will say I've been very happy with NOS Western Electric 14 ga wire for speaker cables and Belden 8402 microphone cable for interconnects. I replaced Kimber 12tc and Kimber silver interconnects and prefer the WE/Belden cables......crazy as it sounds. Jim Smith (author of "Getting Better Sound") replaced megabuck cables with the WE/Belden combo and preferred them also ( as did Jeff Day).....so I'm not the only crazy one! It's a sound preference that I, and they, prefer but I'm sure it's not for everyone. I say go with whatever makes you happy. I'm glad I was happy with something cheap for once!

Oh, and to answer your question.......of course us audiophiles are out of our minds, and I wouldn't have it any other way :)

I did own a Lamborghini (a 6.0 Diablo in Rosso Vik over snow corn with exposed carbon fibre wing) and can tell you:
1. The kind of women that wanted you to take them away were not very appealing to me (I'm married, so it is a moot point anyway);
2. The parts game was a gouge- a door gasket was something like a grand; my mechanic, who specialized in the marque, fabricated one for less than 200 U.S. installed; the shocks for the rear--two on each wheel, failed regularly- those cost about $1,900 a piece, only to fail again. Some owners gave up and put a completely different shock/modified suspension in the car at considerable cost to avoid the constant replacement of the factory shock system.
3. The car was largely undriveable- a big, heavy, grand touring type autobahn monster, not a nimble, carve canyon corners kind of drive.
4. All that said, it was a huge bang for the buck exotic when others cost even more for the some level of "exoticness." The interior was gorgeous, and the view of the rear--with those insanely fat tires and twin exhaust pipes sticking up above the rear bumper-which could melt due to the heat if you drove the car in traffic--was a statement of pure aggression. But the car, which began in some ways as the original Countach, had lost its purity of line.  By this time, Audi had purchased the company, which had always had a rocky ownership history. Audi rationalized the manufacture and ultimately improved the car but when it transitioned to the Murciélago, it also lost some of its Italianatte  flair. The 6.0 was in some ways the last gasp of the Gandini design. 
5. Cables- no comment. :) Buy what makes you happy. Life is too short to do otherwise. 

The higher end my gear, the more of a benefit I've seen from cables.

Just raising my cables off the floor made a significant enough difference, my roommate was angry.

The power of numbers and an all-too-obvious human nature that is preferably obscured; clothing stores aimed at younger women (and I'm sure age, gender nor type of product is hardly the deciding factor here) have seen significant rise in sales just by raising the price of the same(!) items. More expensive must be better, right? That is, more desirable to own by virtue of higher status and self contentment. Actual perceived sonic differences aside (with emphasis on "differences") in regards to audio gear, the importance of before mentioned is not irrelevant, to say the least. 

The classic example of upside-down demand and supply logic (used in some basic economics classes) is that of Perfume: the higher the price the more demand. I cannot comment on cables per se, I really do not know enough, but the last comment by whart is about right: if it makes you happy ...
However, the more exaggerated performance claims sometimes do go a little "over-the-top".