How do we ease Grandma's suspicions and untrusting nature?

Take the $$$ & put it in bank so you have it to care for her in a SNF setting or use it to pay caregiver at home. She’s going to lose it so better she thinks someone stole it ...at least you know $$$ is safe. She has to be safe too ...she is going to need higher level of care. Hugs 🤗

First of all, this woman has dementia and she will never, ever stop mistrusting and believing others are doing things. Nothing is going to change that so don't even try. I would remove from her room all kinds of "important" objects, like insurance policies, credit cards, etc. If she goes after you, tell her you know nothing about it and you don't have the items. Keep standing your ground and do NOT allow her to abuse you - you will eventually lose your sanity and it will destroy you. As far as documents which are missing I am hoping you have some idea of the items she has lost. For example, Medicare and SS can issue new cards. If she has credit cards, call the banks and cancel them. Do NOT allow her to have anything important in her possession - take these things away. And I hope you have a Power of Attorney - you will be needing it. Do not suddenly "find" something - just take it away from her and never let her know or see it again. She obviously is mentally incompetent.

Make copies of her personal identifications and then "white out" one number for safety. Put them back in her wallet and keep the originals in a safe place. Get a lot of coins to make the purse a little heavy, and use dollar bills - even blank sheets in between if you can figure it out. There is no point arguing. Close her bank account, so the checks will bounce if she writes checks to scam artists, or people does take a random check out of the checkbook, this does happen. The purse is like a security blanket. It gives them comfort. Make sure there are not too many places where she can "put things". Remove clutter one day when she is out at the hairdresser or dining out. Good probability she won't notice. They don't have much to talk about other than their immediate surroundings, which gets repetitive. Be aware that the scam artists out there are very clever and will dupe grandma in believing she won money etc etc.... Good luck!

All you can Do is just Ignore Her, Do what is Best from the Rest and Live with it. She cannot Help Herself.

Dementia makes no sense.....her brain isn't processing information properly anymore which leads to all sorts of the peculiar behavior you're witnessing. Paranoia runs wild, accusations of stealing become common, rummaging through drawers can go on for ages while they try to locate something they've lost. That's when they accuse others of stealing.....if it cannot be found, it HAD to have been stolen. It's the nature of the dementia beast and something we've all witnessed in our loved ones suffering the ravages of the damned disease. Your grandmother is no longer capable of organizing her room, or managing money, or doing most of the everyday things she once had no problem doing. Try not to take her behavior personally. Try instead to reassure her that you love her and are there to help her with whatever she needs. Her insurance card is easily replaceable, as is her ID, which is rarely necessary these days. My mom is 92 and I think I've needed to show a photo ID of her ONCE since 2011. Get grandma a new wallet and insurance card, put it in her purse, along with some invalid credit cards, and voila, problem solved, until the next one crops up. As far as all the cash goes, if she's living at home and doesn't go out, it's probably just as safe THERE as anywhere else. If possible, take it away, deposit most in the bank, and put the receipt in her wallet as proof. Then fill her zip loc bag with 100 $1 bills which looks like a giant wad. Her purse is her comfort zone....her safe place.....so let her hang onto it for dear life.
Do some reading about dementia/Alzheimer's which will be beneficial to you in understanding the symptoms and getting helpful advice and guidance on dealing with the behaviors. There are many strategies you can use to help her allay fears and to feel comfortable and safe in her home environment.
Best of luck.

SOMEONE must take action now because carrying around $8,000.00 in one's purse is wrong in so many ways. Someone could steal it, it could be invested, it could be in a bank account and more. As far as her identity and those cards, I hope that you locate them and then keep them. She can no longer be in control! About 7 years prior to my mother's death at 94, she had dropped her wallet on the ground and didn't even realize it! I was right behind her and saw her drop it, fortunately.
I have to ask - How did GMa have that much money on her person?

DO NOT ALLOW HER TO HAVE I.D. OR MONEY WHEN HER DEMENTIA IS SO DEEP - a good rule of thumb is never let her have what can't be replaced or lost - think about identity theft

Once you find that wallet then remove all important items - I let my mom have change, cards that had no potential for monetary loss like rewards cards, library cards and such to pad out the wallet but nothing with information that could cause problems

Many with dementia are afraid that someone will steal from them so they hide items then forget where it is hidden so it is 'stolen' - look in drawers, under drawer liners, in towels, under mattresses, in bathroom cupboards etc - these are just a few places we found my mom hid things so don't just think of where you would put things but where things can fit - take into account that any limitation of mobility so maybe not too high or too low where she couldn't reach

Well she just doesn't want to accept the fact that she misplaces things. I think this is a normal stage with dementia. We have all had that experience of loosing something that "if it were a snake it would have bit me". Why does that happen? The more technical explaination is how we are looking for something. We have an exact image of it , but if it is turned sideways or upside down then it does not click with our search pattern. I have found that instead of using the "exact image" to search, instead I look at an item and think "what is this?" I define it, and if it is not what I am looking for I continue to pick up the next item asking "what is this".

When my kids were young and couldn't find something I would tell them "it's under something.". Usually that is the case as the item could have been easily found had something not been place on top of it.

I am sorry your mother is blaming you, but she is doing this to comfort herself. Maybe you could talk about things you misplace to make her feel more normal with misplacing things.

Have your GM go through each thing in YOUR presence, and when SHE finds what is missing, then it is a done deal.  I tried leaving my mom's photo ID with her when I got rid of her DL, and I told her if it ever came up missing, I would NOT replace it.  She said it wouldn't happen.  So...when I needed it and I gave my mom a week to find it, and she turned her room upside down and swore that she had been through everything and that it was gone, I went to her favorite purse, sat down in front of her asking her if she had already checked there (yes), and when I found it within about the first 15 seconds of looking, what could she say?  She asked me how I did that, and I told her that from that point on, I would keep it with me because I didn't have time for those games any more.  No more arguments from her about me hanging on to important documents.  I ALWAYS keep a copy of the POA and Guardianship paperwork in the car, and her photo ID, her Medicare card and insurance cards in my purse.  That way, I have them--ALWAYS.

My aunt exactly the same way ! I think alot of elderly people get that way especially if they grew up during the depression because they lived with out anything and had to protect everything they had and use everything sparingly because when you ran out it was gone & who knew if or when you would be able to get more . So the way we handeled it when she lost her ID,MEDICAL CARD,ECT....,wait until she's out of the room and look for everything when you find it NEVER EVER GAVE IT BACK TO HER .Eventually she forgot.I kept all the important stuff I let her have the money but it was not that much,I let her have a checkbook but it was from a closed account

so I think your best bet is to get it from her when shes not in the room .The medical cards are needed

If possible, put a nanny cam up. Then you can not only see where she hid something but she can see she had it. My mother’s neurologist recommended that.

Dementia sufferers have problems with decision-making and recent memory. That's why gram misplaces things frequently. It is part of the disease process. Constant routines help with this. However, you need to have plans to secure valuables. Talk with her about this and create a "safe" that everybody agrees will be most helpful. It maybe that the "safe" is somebody else. Post reminders of where the "safe" is.

Seems she needs to be part of the process of "organizing". Maybe go through drawers, closets, etc. while she is in the same room with the organizer.

First I gotta wonder how did she happen to have that much money in her purse? And this might indicate that she has money hidden so do not discard anything until you go through it. Every book, paper, envelope, pocket, shoe.
If mom finds it...don't tell grandma. Just place it where grandma will find it. Like under her pillow, in her shoe, in the pocket of the pair of pants that she will put on tomorrow, in her bathrobe pocket.
There are tags you can get to put on luggage so you can track where it is. Why not get something like that and place it on objects she tends to "misplace".
As to helping her bring order to her room....I am "just" an older person set in her ways and I would not like it if someone tried to "help bring order" to my house. So I can understand why she might be upset. On top of that she has a house full of people that she has to navigate. And with dementia there may be a nagging thought once in a while wondering who you all are.
You will learn that you will never "win" an argument when the person you are trying to convince has dementia.
You will need to learn how to redirect, you will need to learn therapeutic lies are not a bad thing.
And I do not know what the set up now is but soon grandma will need a space that is barrier free, no carpets, no stairs, larger bathroom, shower that is easy to get in and out of. If there is a walk in shower a bench or chair will be helpful. And she may begin to resist showering. It is a scary thing to do so someone will have to help her.
Join a support group, your parents as well.
If grandma is able to Adult Day Care is great and it will give everyone a break.

Good answers from the other commenters. Take their advice. Am wondering: does your Gramma ever leave the house on her own? Does she have access to the internet or answer her phone or go through the mail? This is where scamming happens. If there's a land line your mom can divert the calls to her cell phone. Someone can sort through the mail if your Gramma gets charitable appeals or get a PO box. No internet access for her anymore. Your mom should take photos of her important cards. Not sure what to say about carrying around wads of money...how did she get it in the first place?? If Gramma is calling places like her bank, take away her phonebook/phone. Your mom needs to get control of Gramma's finances before a disaster happens.

When you’re able to go through her purse, maybe take things like her ID or any cards? Would you maybe be able to switch real money in a ziploc with some realistic looking play money? Sounds nuts (and it depends on her level of dementia) but gives her the safe feeling of having cash in her purse. Her purse and its contents are really the equivalent of a small child’s blanket or stuffed animal— makes her feel more secure somehow.

Short answer to your question is: you can’t. No amount of reasoning will work.

First be very clear in your own mind that with Dementia this well going, there will NEVER be ANY understanding possible. Grandma is not capable of it. Please google about dementia and educate yourself so you understand that completely.
I am assuming that your Mom has POA over grandma? If not, someone needs to have at this point, as she seems to be suffering from a very severe dementia, and could lose all her money easily. If Grandma cannot or if demented WILL NOT assign your Mom to act on her behalf as her POA you will need to see an Elder Law Attorney to go to court to apply for guardianship. This is crucial. As must be clear to you, Grandma now is well into dementia. There will BE absolutely NO WAY to ever reason with her. Does anyone have POA for health care, as that is crucial now, as is testing for dementia. Sorry, so sorry. But you need good guidance now. That won't be cheap, but once things are in place, Grandma's finances will be safe in the hands of Mom, who will have to keep spotless records of all expenditure made FOR grandma. Please be sure who is up to this task. It is not an easy one. And please try to watch over Grandma who could lose 1,000s of dollars at a second notice at this point.