Wells Fargo Teacher Grants: Fill & Download for Free

How do banks transfer money?A question asked of me often is How do banks transfer money? How is money transferred from one country to another? I mean how does it work? How does my account get debited of $100 and somewhere around the world someone’s account get credited for $100.Another parallel question is, How does $100 Million transfer? I mean, say if America is giving someone loan, how do the two countries transfer $100 Million? Or even $10 Billion? How does this work? How can the wealth of one country decrease by $10 Billion and another one’s increase by $10 Billion?Is money physically moved? Do they transfer cash in vaults?How does this all work?The most common answer cited by many is SWIFT or Wire Transfer but it still doesn’t answer the question. You still walk away feeling equally baffled by the whole thing.So, how does money really get transferred between banks?Tl;dr:It’s all about trust and ledger adjustments. Essentially, IOUs being exchanged.The SolutionThere are a million ways to explain the solution. Some use complex ledger examples, others, will use a mix of ledger and trust lines, etc. I decided to use an exceedingly simple example that explains the general concept well.Granted, a lot many things are left out, or not quite accurate, but then again, the whole goal here is to make sure you grasp the concept of how banking transfer work.The Lemonade BunchFor any bank to function, there must be deposits and customers. So for our example, lets assume this lemonade stand business, aptly called The Lemonade Bunch.These three hard working folks, generate a lot of income. They sell lemonade like crazy and make lots of money.At the end of the day, they tally their sales and its US$100,000. Now they are holding on to that cash. They need to deposit this money in some bank. Wells-Fargo seems to be their bank of choice, so they walk in to a Wells-Fargo branch and deposit their money (assume for a minute, they are the only clients for Wells-Fargo)So they go, deposit the money and then get a receipt for their deposit, which would look something like this:The bank now has one customer, and the bank’s balance would look something like this:The Banking SystemTo truly understand how the whole banking eco-system works, imagine a school. A school's hallway has access to all the classes. Each class having students and a teacher.In our example, imagine each class being a country.With each class representing a country, then within each class are students and a teacher. The students would be the banks, and the teacher the central bank.This is how USA (for example) would look like:As you can see, that young lady over there, representing Wells-Fargo. She is holding on to US$ 100,000 in deposits of The Lemonade Bunch.So, like in regular school, at the start of each class, there is a roll call, remember that? except this roll-call is slightly different. To start out with, every student (i.e. bank) has brought with them, their ledger book. The ledger book contains all the deposit slips they have issued, and in their back-pack, let us assume, they have brought the money (currency notes & coins) that was deposited.In case of Wells-Fargo, she would have brought in US$ 100,000 and a copy of the receipt she gave out to The Lemonade Bunch. Likewise, the teacher would ask this of everyone:Teacher (pointing to a certain bank): How much money do you have? (and prove it)Student (being the bank), would they say out loud, how much money they have and show their cash/coins as well.Everyone makes notes. So if Bank of America says it has so much money, the teacher notes it down and other banks can too note it down.This what for example how the balance sheets would look like for the US Classroom. I've deliberately not shown the Debit / Credit, etc. for non-accounting people would have a hard time grasping the concept. In plain English, it shows:A Bank (and how much client money they are holding)The Teacher (and how much bank money he/she is holding)Typical example of how the ledger would look like for customers, banks and central bank.To make sense of this screenshot, ignore the Teacher (French) and Teacher (China), we will come to them later on. The spreadsheet ledger view shows three banks and their clients:Bank of AmericaSteve Construction (Client)Arthur Photography (Client)JP Morgan ChaseJane's Bakery (Client)Megan Old Books (Client)Wells-FargoThe Lemonade Bunch (Client)Josh Music (Client)The deposits of each client are marked, and it shows how each client's balances are in check with the bank.The balance money from customers (money taken from customers) matches the books of the customers (balance in bank)....and as you would expect, all the balances of the bank, are reflected in the ledger of the Teacher (the Central Bank):Consolidated view of Balance information as filed with the Central Bank, in this case the Federal Reserve.So the total balance in the classroom for USA is US$ 1,100,000 (One Million One Hundred Thousand Only). There are a couple of walk-way points from this exercise:The total amount of money in circulation is known. (US$ 1,100,000)The distribution of this money as deposited in various banks is known.There is a general consensus (based on the ledger being maintained by the Central Bank) as to how much money each bank holds.If a bank tries to create money (for example: JP Morgan Chase makes up a fake client and says it has received US$ 1 Million from that client), it would have to demonstrate to the teacher (central bank) that it has the money (classical case of Show me the money!). If JP Morgan Chase is able to show the currency notes, etc. its balances would be adjusted accordingly. However, if they cannot show the money, then the central bank will not accept their new found wealth and general consensus amongst the banks will be, not to accept JP Morgan Chase's claim that it has additional US$ 1 Million.The consensus and double-entry system ensures to a larger extent (for our example) that unfounded creation of wealth cannot be done.The Central BanksSo, at the end of the school (banking) day, all the teachers (central banks) then get together in a common room.Central Bankers in a room comparing notes (wealth statements)As you might have guessed, the Teacher, too compare notes. Here the information regarding the wealth ledgers of countries is going to be shared amongst the group.Assume, that the de facto currency being traded in the world is the US Dollar (to make things simple), this is how the ledger positions for all the central banks would look like:Ledger Statement of All the Central Banks after their first Meetup!Is this wealth?Yup! This is it. What were you expecting?This is how the wealth of nations is recorded. In ledgers, which are consensus based amongst the banks, central bank and the central banks of the world.To keep the example simple, as cited earlier, if anyone tries to add value into their economy, the others would have to agree to it. Because the system is based on double-ledger entries, one cannot unilaterally try to take advantage of the system.Because each country has its own currency (just to spice up matters a bit), and If anyone tries to make money out of thin air, then can, but they can only do so in their own denominated currency. Others will agree that a particular country's money supply has increased and will adjust accordingly, based on the exchange rate against the US Dollar (which in our example is the global currency being used by all the banks).So How Does Money Transfer Work?So, let us assume our company The Lemonade Bunch needs to do a wire transfer of US$ 50,000 to China and $10,000 to France. How does this value really get transported? The answer again, is simple a consensus based value transfer.In our example, you will see The Lemonade Bunch, sets aside two IOUs for US$ 50,000 and US$ 10,000 aside. The ledger statement would look something like this:Notice how the total wealth of The Lemonade Bunch is reduced down to US$ 40,000 in their ledger. Likewise the wealth of Wells-Fargo has also been reduced down to US$ 115,000 (as IOUs are created).These two IOUs are then moved to Wells-Fargo's IOUs, and the money is deducted from The Lemonade Bunch's account. Now the ledger position would look something like this:Continuing with the same pattern, the next logical step is to deduct the IOUs total from Wells-Fargo's total wealth in the ledger and pass these IOUs to American Central Bank (Teacher). The ledger statement would now look like this (the two IOUs have been lumped together):You can already see the total wealth as recorded by the US Central Bank has also been reduced from US$ 1,100,000 down to US$ 1,040,000.Giving Money To The Counter-partyAs per the previous experience, all the Teachers (Central Banks) gather in a room and exchange wealth statements. The same would happen this time around, except the ledger is slightly different (as can be seen below):The reverse process would now start. US Central Bank would have the following conversation at the end of the initial wealth exchange:US Central Bank: "Hey China!"China Central Bank: "Yo! What up?"US Central Bank: "Hey, I got a US$ 50,000 IOU for you, for "Bank of China" that needs to be credited to "Xing Framers" account with them."China Central Bank: "Cool. Give it to me and I will hand it over to them with the instruction to credit further."the same conversation would happen with the French Central BankUS Central Bank: "Hey France!"French Central Bank: "Oui?"US Central Bank: (Grrrrr) [smiling] "Hey, I got a US$ 10,000 IOU for you, for "BNP Paribas" that needs to be credited to John-Pierre Imports account with them."French Central Bank: "Cool. Give it to me and I will hand it over to them with the instruction to credit further."US Central Bank does just that, and the ledger statement would look something like this:Once both the Central Bank of France and Central Bank of China accept the IOUs, there collective wealth would increase (as well as the wealth of the bank where further credit is due). The ledger would look something like this:Just two more steps left, before the entire money (value) transfer is completed.Both the Central Bank of China and Central Bank of France, credit the IOUs to the Bank. The Banks (namely Bank of China and BNP Paribas) now have an IOU Credit liability for further credit into the account of the beneficiary which would be Xing Framers and John Pierre Imports respectively.The last step is to credit the bank account balances of each company, which would essentially bring this money (value) transfer cycle to come to an end.Once this credit to bank ledger is done, the final ledgers would look like this:ConclusionI hope with the above example, you will get a very good (if not heuristic) sense of how money is transferred. Though the above example has been simplified almost to an elementary level, this is pretty much all that happens when money (wealth) value transfer happens from one bank to another, be it within the country, or across borders.The above model can be expanded to include how correspondent banking would work and how balances are maintained with each other, etc. however, that might be a blog article for some other day.If you look closely, this somewhat mimics what a blockchain looks like? Its not public or decentralized, but it is consensus based and has a double-entry system to ensure there is no double spend or creation of wealth that others may (or may not agree to).I initially wrote this answer as a blog post: How Do Banks Transfer Money?

We have often heard of a term called ‘crony capitalism’ and situations where the rich continue to grow rich - presumably at the expense of the poor, who continue growing poor. It is a typical “have” vs. “have not” situation. The inequality is far too great and we often hear the kind of statements that are posed by this question. However, just as there exists “crony capitalism”, “crony socialism” too exists. I am going to write a rather long answer and I hope that you do the justice of reading it.It be always remembered that those who take greater risks, get greater rewards. But for every 100 risk takers (those who start a business), more than 90 fail, and only 1 in a 1000 tends to grow really big. Out of the 1 in 1000 that grow big, 1 in that 1000 becomes a really huge business enterprise. This enterprise creates jobs for thousands. The person who starts/owns this business started from scratch and got rewarded because of the risks s/he took. Take away the reward and the incentive goes away. There is no sure way to kill economy. It is either that or it gives rise to tax evasion and creating a parallel “black” economy. This is exactly what happened in India in mid 1970s when Mrs. Indira Gandhi levied 97.5% tax at the highest level. It killed all entrepreneurship.I now recite a small fictional story.There was once a typical school in a typical town. Each class of the school had its fair binomial distribution of bright students, average students, and the not-so-bright students. The bright students studied hard in their subjects all year round, took great efforts and received great grades/marks. The average studied only when the exams were around and they managed to pass or score reasonable but average marks. The laggards wasted their time, never took interest in their subjects or whatever the teacher taught. More often than not, they bunked their classes. Result was they used to fail every time and forced to repeat their class each year.The teachers, in order to improve the overall grade and reputation of the school, took special interest in the bright students. They placed them on the front benches. They often gave them free/extra lessons. They instilled a sense of competition between them to make them strive for even better. The duffers never tried to improve and were relegated to the back benches. The average were neither here nor there but once in a while when an average student showed promise, the teachers extended all efforts to bring him/her to the front benches. This continued for a while.Over time, this led to frustration among those who could not get good marks. They started a public protest stating that the teachers granted special favours to the bright students. A grand public protest was arranged. The pseudo-intellectuals of the society joined the protest and slogan’ed "Justice for All". The protests turned ugly at times. Finally the principal of the college relented to the overwhelming majority of the protesters. He then passed a decree:In each class, the marks of all students would be added up in the common pool.The total marks in the pool would be divided by the number of students.Each student would thus get the same marks.This move was hailed as revolutionary and rejoiced by the media craving for TRP. The "intellectuals" thought that this will usher in the true social justice.As the time passed, the bright students received less marks (in spite of their efforts), the average more or less remained where they were, while the back-benchers gained significantly by getting much more (even when making no effort). The back-benchers were happy, the average shrugged while the brightest felt disheartened, cheated and defeated. They, being in minority, could not counter-protest. As far as the teachers were concerned, they stopped thinking about the school, its reputation and the bright students and took the "couldn't care less" attitude ("let the people worry about themselves").The bright students realized that there was no point in studying hard because no matter what they would get the same marks. Gradually, the average grades dropped. The students started receiving less marks than before. Initially the average and the duffers started murmuring in discontent. Eventually a day arrived when all the students failed. This led to wide scale violence and protests but the damage was done.Some from the bright students realized that their dreams will be shattered in this school and those who could, left to other schools which followed the principle of "the best get the best". The other bright students now became average students and their path to economic success was sealed off.This my friends is communism, socialism, anarchism for you in a nutshell. In the communist environment (which is a sort of dictatorship and anarchy in disguise), the socialistic ideals slowly disappear and those in power start keeping all the benefits distributing very little to the real needy.Ayn Rand explains the same principle in her book "Atlas Shrugged" where a factory starts the principle of "work to the fullest of your ability but you will be paid by the need". So a brilliant engineer who is unmarried and whose only affliction is to good music and gramophone records is denied the allowance because the penchant for listening to good music was considered to be an extravagance and not a need. Meanwhile, the lesser than average worker with six mouths to feed got more money because feeding the family was more important. His daughter gets gold fillings for her teeth because that was the need. The engineer remains quiet all the time. Then one night, he accosts the daughter of the worker, and using a stone knocks off all the teeth of the poor child.This is exactly what will happen if we follow Communism, Socialism, Anarchism and other similar doctrines. Thankfully, this "alternate" form of economics rose its head and died quickly. Man cannot be equal. Even if we take all the wealth in the world today and redistribute it equally, within a century or less, the wealth will return to the rightful. This is because the enterprising, when they get sudden wealth, start thinking of taking calculated risks that will enhance their current wealth; the others on getting sudden wealth will think of splurging in buying expensive items, holidays, pomp and show.Communism / Socialism / Anarchism may sound good on paper but it was designed and proposed by the scholars in ivory towers with no connection to gross reality.I am the last one to state that Capitalism is the one and only and best solution. I know that capitalism has its lacunae and there are quite a few places where things can be improved. A recent example is of a big bank in USA (I think it was Wells-Fargo), where the middle and lower management people were fired for bad performance while the top management took home full fat bonuses, stock options, no paycuts and certainly no blame for poor performance. This is not an isolated example. Yet in spite of these faults, capitalism (or private entrepreneurship) is the best way forward. The government should be left to govern and pass people friendly laws for smooth running. When government or state tries to take ownership of industries (to which they have no experience), it is where the economy spirals downward.

When we’re young, parents and teachers encourage us to dream about our future careers. We imagine reaching the highest form of our desired profession—to become the chart-topping musician, Oscar-winning actor, or world-famous artist.As a Division 1 football player, my dream was to make it to the NFL. But, early in my college career, I suffered major injuries that forced me to step back and reevaluate my options. After much reflection, I made the decision that would change my life—to seize full advantage of my athletic scholarship by completing undergrad early and obtain an MBA.When I finished graduate school a few years later, I found myself at a major crossroads. I could pursue my goal of playing football professionally or start a career in corporate America.At the time, mentors, professors, and grad school peers expressed their concerns about my interest in the NFL. They didn’t want to see my hard work and MBA go to waste if I chose professional football over the business world.But I realized I’d been granted a tremendous opportunity. Instead of choosing one job, I had the chance to do both. I told myself that not only would I work in the offseason, but I would find a job that required me to advance myself professionally. That way, when I did retire from the NFL, I’d still have an underlying foundation in business from which to build a life after football.Looking back, I can clearly see how juggling careers in the NFL and the corporate world prepared me for life as an entrepreneur.Working during the offseason taught me how vital it is to prioritize time wisely.My first job during the 2011 offseason I worked with CaridianBCT, a company that specializes in medical device technology. For eight months I put in full-time hours as a member of their strategic research department.The next year I worked as a financial consultant for Wells Fargo Advisors. In the beginning, it was a remote position that offered a ton of flexibility. Later, when I retired, it translated to a position as co-manager of the portfolio, and eventually partner.Although they were very different situations, both offseason positions taught me one essential lesson: how to prioritize my schedule.At CaridianBCT, I was responsible for working with a group of people to implement new projects and introduce products to different markets. As a result, I had to learn the most effective ways to manage my work-load as part of a team and present our findings directly to senior leadership in a timely manner.My situation at Wells Fargo was very different, but time management was still essential. Because it was an off-site position, I had to prioritize my tasks on my own. I’d decide what needed to be done and when—whether it was studying analyst reports, responding to emails, or making recommendations.So, when I finally started my own company, AMP Human, I’d already learned how to manage time effectively and make decisions under pressure.Today, time is still my most limited resource. Every day is a massive exercise in prioritization. It’s about stacking the list of things to do against time: what should I do now, tomorrow, next month—even a year out. Working every offseason was important to my current ability to prioritize effectively.Balancing my NFL career and full-time jobs gave me invaluable insight into the endurance it would take to one day lead my own company.Endurance is about having the capacity and power to sustain through tough times without flinching or breaking. And my ability to endure and survive longer than others during training and drafting is what got me into the NFLWhen I went looking for jobs in the offseason, I took the skills from the field and applied them to the business world. People weren’t looking for me—I had to advocate for myself to find employment. It was me saying, "This is my background. This is what I want to do. This is the value that I will add to you and your company and your team.”When I decided to take the leap into entrepreneurship, I had to use those skills again. I had to continue enduring and surviving.I didn’t question how I would handle setbacks and hardships. And it didn’t matter when or how they happened, or what they were. All that mattered was that I found a way to overcome the turmoil.Eventually, I even learned to thrive in it.Setbacks are a natural part of life—whether you’re starting a company, building a career, or trying to get drafted. Success isn’t about never experiencing a setback, it’s about getting back up and persevering no matter what comes your way. In both life and business, you get knocked down.The cards don't always fall your way. But you have to make the most of the hand you’ve been dealt and endure to overcome the obstacles in your way.