1/ Why the euro makes absolutely no sense without access to cheap gas - and therefore why the euro is over. 🧵

2/ There are many rationales given for the euro, but when you strip all the peripheral ones away you get to the core argument: the euro is actually a proxy for the Deutschmark and all parties perceive themselves as benefiting from a permanent org to the Deutschmark.

4/ For the stronger economies - those that run trade surpluses in Europe - the euro allows them to flood the weaker economies with their products. Without the euro, the Deutschmark/guilder would appreciate and the surpluses would disappear.

5/ Weaker countries have long had problems with inflation and currency depreciation. Adopting the euro/Deutschmark allows them to experience German levels of financial stability.

6/ Here’s the thing though: that is no longer the case. Why? The stronger economies got cocky. They used their wealth to try to ‘go green’ faster than the other kids on the block and got addicted to Russian gas. With Nord Stream smoked, that gas is gone - for a very long time.

7/ This turns the strong countries into the weak countries. Germany’s inflation rate was 10% in September, the Netherlands had a rate of 17.1%. Meanwhile Italy and Spain clocked in at 8.9% and 9% respectively.

8/ There is every reason to believe that this differential will continue as the previously richer countries, with their economic built around a janky energy infrastructure, decline harder than the others.

9/ So what is the point of tying yourself to the Deutschmark in this scenario? It would be like a financially stable country such as Chile tying its currency to a financial basket case like Argentina.

10/ And so, unless something drastic changes, logic dictates that the euro must fall apart. And so it will fall apart. “That which must happen, will happen.” Iron law of economics. END/