The cash traded for the T-Bills will be spent in the general economy, but the T-Bills themselves, which are equivalent to cash from institutions' perspective, w

The cash traded for the T-Bills will be spent in the general economy, but the T-Bills themselves, which are equivalent to cash from institutions' perspective, will no longer be spent. There's no inflation because these impacts offset each other. The Treasury's balance sheet would nominally change, because it accounts for cash different than outstanding T-Bills. Non-government institutions' balance sheets wouldn't change at all, because T-Bills are cash equivalents [0] from an accounting perspective, which reflects their usage in practice. [0] https://www.investopedia.com/terms/c/cashequivalents.asp https://www.investopedia.com/terms/c/cashequivalents.asp