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Douglas Harper's Etymology Dictionary
Muppet

Trademark (U.S.) Sept. 26, 1972, claiming use from 1971, but in print from Sept. 1970. Name coined by creator Jim Henson (1936-1990), who said, despite the resemblance to marionette and puppet (they have qualities of both), it has no etymology; he just liked the sound.

Wiktionary
muppet

n. (context UK Australian NZ slang pejorative English) An incompetent or foolish person.

Wikipedia
Muppet (disambiguation)

Muppet or similar may mean:

  • Muppets, the puppet characters
  • The Muppets (film), the 2011 film about the Muppets
  • The Muppets (TV series), the 2015 television series about the Muppets
  • Muppets (EP), the EP by Less Than Jake

Usage examples of "muppet".

I mean, if Sesame Street can have an HIV-positive Muppet, why should I be surprised this garbage is making the rounds in our elementary schools?