The United States has not ruled out a nuclear strike against Iran, reports Seymour Hersh in this week's New Yorker. The article quotes a former intelligence officer as saying that the Iranians "are nuts, and there's no reason to back off." A diplomat tells Hersh that some weapons inspectors think the Iranians are "nutcases—one hundred per cent totally certified nuts." Accusations have also gone the other way: British Foreign Secretary Jack Straw called the idea of a nuclear strike "completely nuts." How did "nuts" get to mean "crazy"?
People were nuts about nuts. In the late 19th century, the British used "nuts" as slang for something they found enjoyable: Jack Straw would have been far from "nuts" on the idea of bombing Iran. (This usage may have originated in an old cliché—"sweet as a nut.") Being nuts on something meant you really liked it, but so did being "crazy on something." It's possible that "nuts" became a synonym for "crazy" because of this similarity. In any case, Americans were the first to connect the two, in the early 20th century.
The noun form "nut," meaning "crazy person," may have a different history. By the mid-1800s, nut was slang for head. If someone said you were "off your nut," that would mean you were crazy.
Psychologist Timothy Anderson points out that many recent euphemisms for insanity have sexual connotations. The "nut" once described the head of a man's penis—only later did it come to mean the head of his body, and then his testicles. "Screw" already meant copulation by the time "screwy" came into usage. And various fruit-themed words (like, well, "fruit" itself) connoted homosexuality before they became associated with craziness (as in "she went bananas" or "he's nutty as a fruitcake").
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Explainer thanks Jesse Sheidlower of the Oxford English Dictionary.