The new millennium has not been boring. Since the turn of the last century we have seen two market crashes, a global financial crisis, a complete stock market rebound, the extraordinary rise to ubiquity of the internet, unprecedented government “money printing”, negative interest rates and perhaps a whole new political paradigm. Some economists call this the age of deleveraging or even the “new normal”. But it could just as easily be called the ‘age of disruption’.

The Merriam Webster dictionary defines disruption as “to cause something to be unable to continue in the normal way; to interrupt the normal progress or activity of something”. By this definition, clearly some major disruption has been occurring and in my estimation, we have two types. One is fairly constructive but the other one represents more of a challenge. “Disruptive innovation” is generally positive as it provides new opportunities, jobs and pathways to efficiency while disruptive macroeconomic trends and geopolitics are more problematic.

In recent years, Uber, the rapidly growing ride-sharing service, has become the poster child for disruptive innovation. The traditional taxi cab business has suddenly been changed forever by a mobile platform connecting consumers who need rides with drivers willing to provide them. A customer no longer need wave down a cab on the street and a rider with an electronic Uber account does not even need to hand over cash. The trip is usually cheaper because regular cabs have to charge more to cover the huge upfront investment in a taxi licence costing up to $800,000. In just seven years, Uber, now estimated to be worth $40 billion, has become one of the largest private start-up companies employing over one million people in 64 countries.

Other notable disrupters of this century include Netflix, which is steadily revolutionising the way people watch television and movies. On-demand viewing has scrambled the traditional broadcasting model as Netflix and other similar companies allow viewers to avoid annoying commercials and watch shows on their own time schedule.

Amazon.com, literally a store without stores, has changed retailing for good with its market-beating prices and unrivalled electronic commerce platform. From a start-up online bookstore, Amazon has grown to become the eighth largest company in the S&P 500 stock index employing over 200,000 workers while facilitating thousands of other online retailers within its network. The common thread between Uber, Amazon and Netflix is the internet, clearly one of the biggest disruptive innovations of our time. Enterprises which embrace the net can be winners, but those which do not adapt are in for rough times.

While disruptive innovation creates new industries and jobs for those enterprises falling on the right side of the trend, macroeconomic disruption in this century is more of a challenge. In my estimation, this type of disruption can best be defined by three Ds: debt, demographics and deglobalisation.

Debt lies at the heart of a sweeping secular shift in the financial system as we know it. For probably too long, citizens have elected political leaders who promise unaffordable benefits financed by debt. Elections are won by offering more entitlements, higher wages and pensions, a greater military, etc, and anyone watching politics over the past couple of decades knows no one really takes the maths very seriously. This has worked for a long time but cannot continue much longer.

Public debt in the United States for example, has exploded by more than 20 fold during the past three-and-a-half decades climbing from under $1 trillion to over $19 trillion now. Like a credit card, that never gets paid off, the balances continue to rise and then are handed off to the next group of politicians who make even more promises. But payback time is coming. Fiscally, the only way a government can reduce debt and the deficits which cause it is by spending less or raising taxes. But both tactics lead to less growth.

Demographics and specifically, the ageing of the largest industrialised countries is another major disruptive force which directly impacts the productivity of the global workforce. According to a recent United Nations report, the number of people over the age of 85 will increase by more than 350 per cent from 2010 to 2040. Improved access to healthcare, advances in diagnostic testing and the ongoing breakthroughs in pharmaceuticals and medical devices are all boosting longevity. On top of that, the “baby boom” generation is hitting retirement age en masse this decade.

While living longer is a great thing, it also crimps growth. A country’s growth rate is simply a function of how many people are working and how productive they are. However, older people generally don’t work or if they do are less productive; and ultimately they need to be supported.

Debt and demographics are weighing on economic progress and when growth is elusive, upset citizens look for politicians offering new solutions. This leads us to deglobalisation. In times when jobs and pay rises are plentiful, the status quo can be just fine and global trade tends to thrive. But no growth and stagnant wages do the opposite.

Donald Trump’s rise in popularity has certainly disrupted the Republican Party in front of America’s November election. The Donald’s abrasive style certainly makes great media fodder, but really his rise in popularity is largely fuelled by an appeal to the working-class person struggling to make ends meet. The brash candidate shoots from the hip against immigration and beggar-thy-neighbour trade reform, but the underlying message represents a pushback against disruptive economic stagnation. Britain’s referendum to leave the EU and fences along the region’s borders are also examples of deglobalisation.

Veteran bond manager Bill Gross calls it “flying at stall speed” but I think of it more as driving in first gear. No matter how hard you push on the (monetary) gas pedal — whether through massive central bank bond buying or negative interest rates — the vehicle can only move forward at a crawl and it tends to burn up the engine!

Where we go from here depends on the ability of innovative technologies to create new solutions to old problems. The point at which the two paradigms of disruption intersect is best summed up by noted economist John Mauldon who writes: “The race is between how much money governments destroy versus how much humanity creates. Long term, I’m going to bet on humanity. In the short term, I’m afraid governments may destroy more than we are going to be happy with.” Investors should pay heed.

Bryan Dooley is senior portfolio manager with LOM Asset Management. He can be contacted at Bryan.Dooley@lom.com.

This communication is for information purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. Readers should consult with their Brokers if such information and or opinions would be in their best interest when making investment decisions. LOM is licensed to conduct investment business by the Bermuda Monetary Authority.