We're talking about basic income for the purpose of ending poverty, not giving people a billion dollars every year for some undefined purpose. Your hypothetical is nonsense.
One of two things:
1: It sits in the bank, where it's lent out for investment
2: It's spent, possibly on something optional but still legitimately useful and non-frivolous, in which case it flows back out into the economy
I don't see a bad outcome..!
I'm probably just preaching to the choir, so you can have the last word if you want it.