My wife has vascular dementia and decided to cut the buttons off of her jackets.

I tend to agree with Fawnby and go to a thrift store to replace the jacket with familiar look alikes. Preferably with Velcro that are sewn in. If Velcro isn't sewn in, they will pull off. Tell her you removed the buttons to make it easier for her. You could do that to her jackets yourself but Velcro is difficult to sew. Maybe you have children that could do this?
Velcro is by far one of best inventions for seniors and people with arthritis!

I would make sure scissors and knives were well hidden.

Try distraction and redirection. Have a strategy for this. My husband will take out his mobile phone and start playing funny animal videos on YouTube for my Mom when she's stuck in an unpleasant rut.

Is your wife on any meds for depression or anxiety? If not, this may be something to discuss with her doctor.

She may forget all about the jackets if you don't make a big fuss and do disappear them to somewhere that she won't find them. Quietly go to a thrift store and buy some new jackets similar to the old ones (which you will have taken photos of so you can shop for similar ones). Zippered jackets are a good idea.

My concern is that if she starts removing buttons from other things, she may try to swallow them. My husband has tried to eat decorative table settings and his hearing aids (I think he succeeded). And napkins, which he finds most tasty, and his bibs, and other small things that look appetizing. So watch her carefully for such behavior. She may want to chew on these things.

No need to reason with her at this stage. She will never understand.

This is the time to start exploring placement options. The hypervigilance that you will develop in answer to wife's behavior will be very stressful.

I wish you luck as you travel this path together.

I agree that anything sharp or potentially dangerous should be quietly removed from within reach. We also put away small breakable knick knacks that were on counters and tables, as my parents were in their 90s and fall risks.

I also found that trying to talk my dad out of things he thought were happening was a losing battle. He was certain he was making sense, thinking someone had stolen things, that he needed to raise the rent for the tenants in his apartment, yet he and my mom lived in a house, etc.

All I could do was listen.

What helped the most was medication. Seroquel and as needed anti-anxiety medication. The dementia will only worsen, unfortunately.

Try a jacket with a zipper

I'm sure this is frustrating for you, too. Generally, people with dementia can't be talked out of things. Lock up the scissors and other sharp objects in your home.