A leading global investor has warned that negative interest rates are a sign that the financial system is not working and will eventually force a reset of the debt-fuelled economic growth model that’s been in place for more than two decades.

Larry Jeddeloh, founder and managing director of the Institutional Strategist Group in Minneapolis, warned of a real and growing risk of a credit "bust" occurring in China over the next couple years.

'There’s going to be some kind of monetary reset", Mr Jeddeloh said in an exclusive interview with The Sydney Morning Herald and The Age on the sidelines of the UBS Australasia Conference in Sydney on Monday.

“The next recession, or the next major market decline, will force this to happen.”