What the kid don't know won't hurt him. If your friend has a two year-old that he insists on throwing a birthday party for, and that friend isn't too sensitive, buy them some second-hand toys. These kids barely have object permanence, so they're not going to notice if their Big Wheel has a couple scratches. Of course, you should make sure that everything is properly disinfected and appropriate for the inevitable "shoving the thing in their mouth" moment, but if the parents don't consider their child's gifts to be status symbols, buy them on the cheap. If they do consider their child's gifts to be status symbols, then best financial decision you can make is to get some new friends.