You've been asked to finance a party to which you are not even invited?
First of all, it is not YOUR responsibility to pay for a party your inlaws are hosting. Good Heavens!
It sounds like they want to throw a party they can't afford, and have come up with a way to get others to pay for it. They should be ashamed of themselves, but I bet they think they're just very clever.
Certainly you should not be handing over any money for this shindig. To do so will only confirm their misguided notion that this is the proper way to treat their relatives. I can only imagine what their behavior will be like when the actual wedding rolls around.
Just curious.....how does your dh feel about paying for this party? And about the non-existent invitation to said party?
So, to answer your question, yes. You should just not show up. Consider yourself lucky to not be dragged further into this debacle.