A era in discount merchandising came to an end Sunday, when the last of the famed Sane Freddies electronics stores closed its doors, a victim of what one industry analyst termed the trend toward psychosis in American retail. I am a reasonable human being with reasonable prices, said Frederick Sane Freddie Klein. My competitors, on the other hand, are insane. I can no longer compete. A Panasonic XBS-2000 CD boom box with detachable speakers and MegaBass for $129? Thats pure madness. A Magnavox 19-inch TV with SurroundSound for $199? Utter insanity. Klein, 43, built an audio and video empire and became a familiar figure on television with his promises of rational prices and lucid service. Customers had long marvelled at his ability to keep his head about him and control his temper, even during the enormously hectic holiday shopping season. His stores were models of moral and intellectual stability, said Frances Noonan, a long-time friend and customer of Kleins. Whether I was buying a new Aiwa-brand 300-watt stereo or just a few 12-packs of Duracell AA batteries, everyone who worked there was consistently coherent. Those familiar with the retail industry say there is no longer room for merchandisers such as Klein in an era dominated by schizophrenic, paranoid and utterly delirious entrepreneurs. This was inevitable, said Douglas Lehman of The Wall Street Journal. If you look around the business landscape right now, the big retailers are Schizophrenic Johnnys, Mentally Ill Nates, and Electronics Gone Completely Awry. These places are owned and staffed by the certifiably insane, and their prices are so low they reflect a profound loss of contact with reality. Reaction among Kleins competitors was mixed. Bat-shit Freaking Insane Johnny Petrocelli, whose self-named string of electronics stores recently opened its 200th outlet, gloated over the business demise of the man he said had installed the transmitting bug in my ear that sends my thoughts to the head of the CIA. Offering kinder words was kitchen appliance tycoon Nutty Nate Roberts, one of whose 13 separate personalities, Victor, praised Klein as my Daddy. Electronics is but one of many industries being revolutionized by the current demand for mental illness in business. $45 million was made last year by Psychopathia Sexualis Mufflers, an automotive-supply store founded jointly by 15 patients of the California Home for the Criminally Insane. 