How do I tell people that she has dementia?

Just a suggestion: replace the landline phone with a cell phone and LOSE her list of phone numbers to those numbers where she can and does make financial changes. As POA, have her records/documents flagged that BEFORE they make changes she requests to run it by YOU first.
Have her cell phone fixed so that all incoming calls that make her phone ring or vibrate are ONLY numbers on her contact list.
Just suggestions. Been there. Works for us.
SO FAR

Telephone or no telephone?
The situation is that we caved in and gave her a phone in her own room in assisted living home.. she's made calls far and wide instigating financial and personal trouble for herself and now is angry especially with me. I've been on 'aftermath cleanup' nearly 24/7 since the phone service was activated five days ago.
How should I alert the names in her personal address book about her dementia so that when/if she calls people they will know to avoid topics such as health and finance.
I'd like her to have a phone but she seems to mentally overload with destructive ideas. It was my hope that she would just want to contact old friends and relatives to chat about how happy she is in her new senior living home. But sadly what has happened is she dwells on making executive decisions that are detrimental to her financial well being.
I am her durable power of attorney effective and will continue to do my best to provide her the finest senior living and comforts as well as handle all her affairs.
It becomes mentally exhaustive to ride her rollercoaster - one minute she loves me more than anything, next minute I am the monster.
How do you keep yourselves focused on a productive financial outcome without changing course all the time as she would have me do.
For me, fiduciary obligations are not intimidating when emotion isn't a factor - seeing logic through checks and balances is reassuring and dependable. But when she makes demands and then belittles me when I don't jump, it is troubling and I am exhausted.
How do you others cope?

You tell them directly. A website that explains the dementia type would als be helpful. My mother was in the early stages of Alzheimer's for years. She understood that she had Alzheimer's and did her best to fight it's progression. She actually told those she wanted to know of her diagnosis of AD. Now she is in the moderate/severe stage, it's pretty much evident through conversation.

What does your friend want? Is she able to voice an opinion? How far along is the Alzheimer's? Do other people need to know about the diagnosis?