definately not. Either the rebbe is an idiot and just wanted to mussar the "rich Americans/ballebatim " or your SIL is clueless about whats considered extravavagent in that community. In my kids school you're not allowed to bring fancy nosh such as cornflakes bec. it can make others jealous. (That may be an old outdated rule but you get the idea)
Not oblivious. Both parents grew up here, her kids looks, acts, eats, and has possessions like every other kid in the neighborhood. Its not a Chutznik neighborhood where there's problems between the has chutznikim and the has not israelis