Michael Smith often writes about songs that have other sources (like Spoon River Anthology) and I have often wondered if this song is about the grandfather in the children's book "Hans Brinker or The Silver Skates".
It was a long time ago that I read it, but as I recall the grandfather has some kind of brain damage and the book's conflict centers around Hans winning the silver skates to pay for some piece of surgery that his grandfather must have. But I think maybe it was that he was going blind, not demented. Does anyone remember, or have the book to hand?
Blessings,
Barbara