Just found this interesting entry. The last part describes my experience of psychosis succinctly.
Language games in schizophrenia.
Effectively, I became addicted to thinking about how words could be used to make coded references. I became obsessed with playing language games instead of using language primarily as it is normally used.
I have been able to observe and converse with my fellow patients, and I have come to the conclusion that the overwhelming majority of the patients are also lost in a world of language games.
People who suffer from paranoia often report a high state of arousal during times of paranoia and I have felt this too. I think that the effect of this state of arousal was to make me very susceptible to language games because I was very conscious of every little gesture, nod, and glance made by other people and seemed to interpret this eventually as evidence that a language game is being played whose meaning I would then have to decode.