OP, this may or may not be the case, but I just wanted to say -- compulsive shopping can be a sign of real mental illness. That is something your husband should consider and look into if things are out of control.
Wild spending can be a sign of the manic side of bipolar disorder. I have a friend who is bipolar, and before she was diagnosed and treated, she would spend frantically when in a manic stage, to the point she had huge debts, unopened boxes in her closets, unworn clothes hanging with tags still on them. If at that time she had had children, I am sure she would have shopped like this for them as well. Another friend, a guy, also spent when manic -- bought his wife tons of gifts that weren't her style "just because" and that clued in wife that something was going on....
So it's worth being aware that this kind of spending can be a red flag. Maybe sit down with your husband and other family members and think together about other signs you see.
And at a less grave level, overspending and giving many gifts can just make some people feel they are more worthy -- if she has always had self-esteem issues she might feel (without knowing she even feels this way) that if she doesn't lavish material stuff on everyone, she doesn't matter to anyone, including herself. \
Others are right when they say that your husband and his family need to talk to Mom about having money for her later years, but that won't do much good if she has a true addiction to shopping or is doing it as a manifestation of something else like bipolar. She won't just wake up when confronted and say, "Oh, you're so right! My golden years -- I will stop buying stuff today and start saving immediately!" She can utter the words to placate her adult kids but she'll likely be thinking, "Just a few things for this grandchild, a few for that one...."
I don't think she is bipolar, because she doesn't really have depressive crashes or other signs of bipolar disorder and she has more or less been like this all the time, even when they were kids. I think it is the second thing--buying gifts and lavishing material stuff on everyone makes herself feel worthy. She loves feeling needed, and now that her kids are grown, she focuses that attention on her grandkids. She doesn't really get that much joy out of buying stuff for herself--just collecting saving any "antique" from her parents house and so on, even if it is falling apart and useless (hence the hoarding). More, she has just had a really unfufilling marriage, my FIL is not very affectionate and can be controlling and verbally abusive. I think it is totally a self-esteem thing that makes her feel good and like she is being extra-loving and needed.
My husband has been trying to get his mother to change her spending habits since he was about 12 years old. It is in one ear and out the other, because it is a serious, pathological compulsion to buy stuff, so talking to her is a lost cause. She will either say that we are treating her like she's in therapy, or she'll say a few words to placate us and keep doing what she's doing. For now, she has some place to live and my FIL deals with the bills, and they are both a little under 60 and reasonably healthy, so we won't necessarily have to deal with the consequences of her fiscal irresponsibility for a while. Since there is no changing her behavior, there is no sense to worrying about something that is out of our control until we have to.
FWIW I have a pretty good relationship with my MIL. She is very loving and I am very fond of her. I just worry that a lot of stuff I can shrug off because it doesn't really impact me now, but over time especially once we have kids, it will be a different story.