My prefix is a reply
My suffix is insanity
My infix is grassy
My whole is false
There is a little joke here bonus points if you can find it
Hints
Crossreference
How many fingers am I holding up?
Monopoly money
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COUNTERFEIT
My prefix is a reply
A counter is a response
My suffix is insanity
Feit is pronounced as "fit", as in a fit of madness or insanity
My infix is grassy
Terf is pronounced the same as "turf", an upper layer of grassy ground
My whole is false
Counterfeits are fake
This also fits with some other clues, because
Counterfeit money will get you in trouble with the law, and another term for counterfeit/fake bills is "Monopoly money"
This doesn't fit all the clues, but perhaps some of this will help others:
kleptomania
Details:
Title: "In trouble with the law" - if you're a kleptomaniac, your're probably going to get caught stealing eventually.
Prefix: k = this just might be the single most popular reply in all texts and chats.
Suffix: mania = insanity
Infix: lepto - symptoms of the disease might be "gassy" (vomiting and diarrhea). Close enough to "grassy"? Hehe.
I don't have a match for the rest, but here are some ideas: "How many fingers am I holding up?" might refer to the book 1984, where Winston sees 4 fingers but is trying to be convinced (via drugs and torture) that there are actually 5 fingers, and the goal of this exercise is to make Winston "sane". Maybe there's a big brother reference in this puzzle somewhere? For monopoly money, when you start the game you have 1500, and the entire game comes with 20,580, in case either of those numbers are relevant somehow.
Acknowledge?
Ack is fundamentally a reply - it is used for nothing else. There's a certain infamous grassy knoll. One might indeed stand on the precipice of insanity, on the thin ledge before the fall. I...suspect that this isn't truly the answer, because it doesn't seem to fit the rest of the riddle all that well, but it fit those first parts well enough that I wished to share. Unless the joke is that by "whole" you meant "hole", and you're saying that "allege" is false?