Why does elderly dad with dementia have an obsession with having lots of cash?

At his age, he most likely was affected by 'the depression' and with dementia they keep going further and further back in their memories. Maybe it has something to do with that. If he can't explain it, then most likely it's a non-logical dementia related blip in his memory. I guess as long as he's not spending the money, but makes him feel more secure by just having it, then no harm no foul I guess. I read once that the actor W.C. Fields was so scared about running out of money, that he had hidden bank accounts all over the U.S. under different aliases. Can you imagine going thru all that trouble only to get dementia and NOT be able to remember where you put your money? :)

Should someone with dementia be withdrawing funds on their own?

Back in the day my FIL liked to hide money in his house and kept a stash in his closet safe. He would actually demand that MIL bring him the cash to the nursing home for him to count!

My mom is 91 and does the same thing. The only problem with that is when she was diagnosed with Dementia she had stashes all over her apartment. And then one day decided she was going to throw out a bunch of old paperwork. I know she had at least 3500 stashed that we never found....so if something happens, check every nook and cranny of his place before throwing anything out.
Mom did have some stash that she found after the dementia set in and thought she won the lottery. So she was spending it right and left. So if you can find out where he is stashing it, or maybe buy him a safe to keep it in.
I agree with NancyH. They did survive the depression so it's just his human nature to want to keep the money with him.

This person should not be deciding how much cash to withdraw each week. When he needs more care (and with dementia he will) how can it be paid for with money he has lost? He needs to be protected from himself.

Thank you all for your kind and helpful replies. Dad's parents both had dementia and his dad was the same way with money in the end. Only he had no one to watch out after him and he wandered with pockets full of money. Perhaps being the conservative one all his life in regards to providing well for his large family and being frugal like Mom, he now wants to let go and be wildly generous. This would have been wonderful when in his "right mind" but now it seems a crime to accept anything from him because he is not truly aware of his behavior. Only some of the family thinks it is just wonderful and have their hands stretched out. His moral teachings did not reach a few of the grown children!