Sounds like a sociopath. Nasty if you have to work with one. I agree with your caution.
Here, with our Dept of Ed, I have been working actively on staff selection panels. The RULE here is that an applicant for a Dept of Ed job MUST, if they are already DET employees, use their immediate supervisor or school principal as their first referee. The second referee should also be someone in the job who is senior to them, preferably someone at the same school. The third referee can be anyone but it is sensible for them to be in the job too.
When we interview the referees we do it over the phone and we MUST interview first and second referees for all applicants who we are going to interview. We have to decide whether to interview or not, AFTER we call the referees. And the first question we have to ask a first referee is, "Are you aware that the applicant has applied for a position at our school? Have you seen their application and do you consider it to be an accurate record of the applicant's experience and ability?"
There is no way a DET staff member can apply in secret for a DET job.
Your supervisor, on the other hand, has a lot of problems. You need to stay below his radar so his problems don't become your problems. If this person ever sacks you, can you fight it? Do you have Unfair Dismissal laws? We used to have, but a previous government pulled the teeth on the legislation and the new government has not yet made replacement dentures for the legislation...
If you are really good at your job and have an idiot supervisor, the other possibility (or hope) is that you could be headhunted.
Cover your rear in everything you do, keep detailed paper trails with back-up copies kept on a memory stick only, not on your computer at work. Never forget that a supervisor like yours can, and will, go through everything you have on your computer.
I had a boss once who went to my computer in my absence (I worked part-time) and moved my files around, buried them so deep I thought they had been erased. Vital stuff - for me. She changed the file name and created a new folder to put the file into. The file was my personal running sheet of who I had contacted and what their response had been. I relied on that to get my job done at all. The running sheet was of zero use to her (which is why at first I thought she might have deleted it) so her only motive in my case could have been mischief, and giving herself an excuse to sack me (she was working her way through all the staff - I was the last one left, I finally quit before I could be sacked).
Basically, what she did was the equivalent to a husband taking his wife's diary, painting it a different colour and then burying it in the garden.
Marg