This one is break from the normal anti-government theories that can thrown around. This one is a bit more on the creepy side however. The theory is that Arnold's grandparents are really his parents that decided to have a child later in their life and because of the Arnold is actually a mentally challenged kid who goes in and out of different waves in his mind. All of his friends are really just made up and he hallucinats them. To back up this claim that the shape of his head is that the same as a child with Arnoldcheri disease which affects the shape of an infants head. The theorists point out that his friends all have the same shape head as him and the reason he made them up is because hes tired of getting picked on and treated as an outsider so he made up a bunch of people like him so he could feel like he belonged. There is also a rumor that the cartoon was based on an experience the writer had when he came across a child with an odd shaped head and old people for parents.