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UBI Investment Bank

There are many types of banks which range from merchant banks to retail banks.
In a UBI driven economy, we will need a new type of investment bank to handle investments in small companies and process profits generated by those companies in UBI friendly way.
State run UBI (Universal Basic Income) Investment Bank differentiates itself from other banks by banking profits from companies by allowing it to be re-invested in a UBI friendly way to generate VAT revenue and more profits through the VAT mechanism.
Money put into a UBI Bank is not taxed.
Only profits can be put into a UBI bank for the purpose of avoiding a corporation tax.
Royalties from patents can go into UBI bank to avoid traditional heavy taxation.
UBI bank does not deal with normal every day cash retail banking transactions.
So imagine your company puts all its annual profits into a UBI Bank instead of paying it to investors and attracting a corporation tax, a year later you will receive interest to a maximum value of the current VAT rate. This level of return can be larger than any other form of activity.
VAT can range from 10% to nearly 30% depending on country. The interest is far higher than normal banking interest rate. The UK rate is 20%. So lets stick with that number.
How are these big returns possible?
The funds in the UBI Bank is made available to any other company that banks their profits at the UBI Bank and wants to borrow from the UBI Bank. They will pay 20% VAT on the amount borrowed which is given to the investor that supplied the cash.
When cash is borrowed, the smallest and oldest investment is chosen to be lent first, before the next biggest investor.
The returns for small investor is very good.
However, if there was not enough borrowed in the full year, then whatever net VAT was generated, that is the return.
Also costs are kept minimum 1% of the managed total, and are subtracted from final payout.
If money is lost, it is written off because the due diligence of the bank has failed, and the the losses are shared evenly and proportionally between all investors. This can be a variant to apportion less losses on the smaller investor.
There is no bean counting infrastructure to convert the losses into court cases and debt recovery which places huge burdens on the UBI Bank and/or its customers when everyone could be doing something else more productive and generate VAT revenue.
There are lot of restrictions on UBI Bank lending because it is not dealing in commercial cash, it is dealing with untaxed cash for UBI tax revenue expansion.
So when you order a $100,000 machine, UBI Bank has no hesitation to lend you the cash because the money is going to a factory that keeps the UBI economy moving.
The UBI Bank cannot pay directly anything to you. It can only pay the factory on which the order was placed for the machine.
The UBI Bank will do some due diligence to make sure the machine is something you need, can expand your business it, you have market for the goods, and you can pay it back.
The UBI Bank does not seek securities to offset the value of the investment because the money has gone directly into a factory to keep the UBI economy moving.
A project may have an incomplete list of thousands of items and services to be purchased - not a problem, a budget is set and from that each payment request is trusted and sent by the UBI bank.
If for some reason, the machine got destroyed, or trust is broken, or the venture failed, and after due diligence, its not anyone's fault, you as borrower is entitled to have that written off to minimize paperwork and further bean counting and administration costs.
You can buy a new one again, and the bank likewise is entitled to write the debt off, and if required, wire funds to make a new machine because it keeps the UBI economy moving.
Even if you have a negative balance, you can still borrow more and within reason, without reference to previous loans.
The idea behind allowing you to borrow again is four fold.
1. You have paid some of societies debts by creating the purchase of a $100,000 machine that allowed the UBI economy to be moving.
2. Secondly, if you are successful, at some stage you will generate profits which could be banked into the UBI Bank and eventually clear everything you owed.
3. Thirdly, you would be generating VAT for UBI simply by buying and selling more products with your project even before you begin banking profits into the UBI Bank.
4. Fourth, if you failed to pay back what you owed in your lifetime, this is only a notion of debt as no money was ever given to you. All funds were spent on your behalf by factories producing goods and services which the UBI bank due diligence agreed was a worthwhile risk based on your good idea.
At any one time, the net profit could be higher than 20% because your money could be lent out and returned many times over the course of a year.
The investor is only paid 20% maximum over the year equal to the VAT.
So money invested into a UBI Bank is not taxed directly. But it can generate more cash than the 20% that needs to be paid back to investor, and this net surplus cash it taken by government as its own profit. If the UBI Bank is in private hands then it can take the cash, but always rules need to in place and they must pay 20% VAT on the profits they take. The rules are not there to penalize entrepreneurs but to make sure cash is not siphoned off out of the UBI economy.
To a large extent private companies cannot make a UBI Investment Bank work because they will end up siphoning profits and investing it in gold or some other instrument which locks up the investment. That is not the purpose of UBI Bank - it is always to re-invest as much as possible at all times and within reason near total disregard for economic indicators until all the cash is gone into factories churning out products.
UBI Bank work is to prevent cash being tied up in any form. All its income is dispersed as fast as possible out to factories to produce products. If the current management cannot handle the rush of cash, then it should be replaced by those who can invest in the best ways possible to keep the UBI economy moving. Example, if we can't use the cash to build more ships, then use the cash to build more chip factories by giving it to those borrowers who say they are capable of making such a factory. There is never an end to ideas, and thus any cash that is not invested is down to fault of the management not being pro-active enough to expand the UBI economy.
The world will soon move into Technological Singularity and from that into Crowd Governance through Internet.
Local authorities run by Crowd Governance can opt to set up their local UBI Bank to speed up their local economy.
In case traditional banks push back against UBI Banks, we need new types of banks to be approved all the time any way, and so removing of regulators stacked with traditional banking supporters with conflict of interest is the answer.
The highest risk in a UBI Investment Bank driven economy is that it creates more projects and economic churn than labor or resources available to complete the projects.
If government owns the UBI Investment Bank, then it can choose to payout its profits after cost deductions as UBI.
Private banks may complain about loosing business. There is nothing to prevent them evolve, and follow the UBI Investment Bank business model when their old business models fail.
Private banks that choose to run UBI Investment Bank business model and will always complain the state run version of UBI Banks are more generous with their investments and criteria for investment. They are not entitled to such complaints while state run UBI Banks generate more turnover and have greater numbers of customers.