Weirdly enough, the original song is from an Italian soft-core porno movie called "Sweden - Heaven and Hell". Here is the link explaining the origins and incorporation into the Muppet song:
Either Jim Henson and his staff were in the dark as to the true origins of the song or they were perpetrating a clever inside joke for the adults "in the know" to enjoy while they were forced to listen to the Muppet songs ad nauseum.
RIP, JH!
Awwww... I was going to guess it started as the background music to a Johnny Danger bedroom scene.
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