The mention seems to be related to his suicide. "Crazy" might not be the appropriate word, but his suicidal idealization (see For Whom the Bell Tolls) was detrimental. He also shot his legs up while fishing with a machine gun, so he clearly did crazy things...

"Crazy" is a bad word. There's "crazy" and crazy. Hemingway was touched with unique ways of thinking, but he wasn't John Nash (with all due respect to Mr. Nash).