It is considered a default so yes in the financial world that is the case.
But it’s not clear IMO such an action is against the text of the amendment, taken in its context. ‘Plain text’ doesn’t mean any snippet taken out of context . This comes up all the time with:
“…the right of the people to keep and bear Arms, shall not be infringed.” That’s completely simple. 
OK that’s a little more extreme use of the clippers, and there’s a robust long running debate how exactly “A well regulated Militia, being necessary to the security of a free State…” qualifies the first snippet.
But IMO there’s still some similarity to that and taking
“The validity of the public debt of the United States…shall not be questioned.” without considering the context of the following sentences of Section 4 of the 14th Amedment referring to Confederate debt (see above). It implies a meaning of ‘validity’ more like ‘we hereby make clear that the Union was authorized to have issued debt in the name of the United States during the rebellion and in future to cover any of its costs ie the rebellion is irrelevant to the validity of US debt’, contrasting that with ‘the debt issued in furtherance of the rebellion is void’. It wasn’t particularly meant to say there could never be renegotiation of ‘valid’ debt with creditors. And what was meant has clearly been a factor in innumerable USSC decisions.
Francis Vaughan
“So which sovereign countries holding US debt does such a law have sway over?”
Each sovereign bond issue states which country’s law disputes will be settled under. For US debt, it’s US law. It doesn’t matter who the holder is. Their only legal recourse is in US courts. Recall the recent dispute about Argentine debt. Argentina had forced a bond exchange (effective default) on holders of some of their bonds issued under US law, and others issued under Argentine law. In former case there was a whole long running circus where creditors sought remedies in US courts but via taking action Argentine assets in their countries, and then the issue of getting Argentina to obey US court rulings. But for the Argentine law bonds it was simple. Argentine courts upheld the deal, end of legal recourse for those holders, inside or outside Argentina. Same would be true for all US debt.
Legally. Obviously such a situation would be a shtshow, but would only happen as I mentioned in some hypothetical where the country (doesn’t have to the US or only the US, maybe someday a concerted action by a bunch of over indebted rich countries) decides it’s less costly in fallout to hair cut bondholders than suffer the side effects of inflating/monetizing the debt away. Russia did this in 1996, hair cut Ruble bonds. In theory they could have just printed more money.
*I don’t take Trump’s musing on that seriously, though if it keeps the political spin going to treat it otherwise, fine.
Considered a default yes but one of the basic questions is how ‘denying the validity of the debt’ relates to default. There is no financial world convention to equat those two. ‘Denying the validity of the debt’ doesn’t appear outside the amendment or discussion of it. The rating agencies would class a partial payment or forced exchange as a default, but it would be the courts deciding if that meant ‘denying the validity’.
And they might IMO find it did not, given the context of the whole of Section 4 of the amendment as described already. And besides that, ‘the United States shall never default on its debt’ would be absurd as an open ended legal requirement since it’s not specified what kind of debt or monetary system. If the US had eventually come to issue most of its debt in Sterling, and ran out of foreign exchange reserves, what would be the meaning of a constitutional amendment saying it ‘can’t’ default? Similarly what if another amendment had been passed saying US had to have a strictly gold backed money system but the country ran out of gold? We know that virtually all US debt is denominated in US$ and we now have a pure fiat money system, so at least in theory the govt can always chose against explicit default in favor of monetization. But the amendment writers couldn’t have, which is more reason to doubt ‘deny the validity of the debt’ necessarily includes default.
But isn’t there a difference between defaulting and questioning the validity of a debt? Can’t I say that my Visa bill is valid, yet still renegotiate the terms?
The president can just veto any bill that tries to raise the debt ceiling. There. Debts don’t get paid.
Any claims in support of insurrection or rebellion (arbitrarily called terrorism by the Executive with no supporting evidence or probable cause) “shall be held illegal and void”. See the 14th Amendment. The executive has violated almost every amendment just by waving the terrorism flag.
Let me say this another way: the Art I power to regulate interstate and foriegn commerce, including banks, is not in any way related to the fiscal policies of the US. Just because the US can freeze private assets doesn’t mean it can freeze public ones. Clearer?
Yes. Good point, relating to an earflier post But I don’t see it has anything to do with the provision in the 14th Amendment…
President Nixon did as much in Aug, 1971 when he severed the last remaining link to the gold standard and the post war Bretton Woods financial agreements. Treasury would no longer pay gold in exchange for dollars to foreign central banks.
That is not reneguing on a debt.
US debt, valued in dollars, continued being paid in dollars on schedule.
Could Congress or the President say that a dollar is now worth 1/1,000,000 of what was formerly known as a cent?
LOL… It sure as hell is, not to mention breaching contract law. It’s a form of default, as is inflation when you get right down to it.
Can you cite reputable sources that agree that the end of Breton Woods violated the 14th Amendment, or had something to do with the national debt generally?
Oh puhleeze. This is all a matter of public record.
For the purposes of the OP, I think it’s clear the President has a lot of latitude in financial matters. Nixon did his thing unilaterally and in secret. Going farther back to FDR, in the same vein he signed an executive order outlawing the domestic gold standard, the public holding gold coins, bars, gold certificates, gold clause contracts, and reneged payment on interest bearing gold bonds. The penalties or fine was $10,000, pretty steep in 1933. FDR then later raised the official price of gold from $20.67 to $35 netting a hefty profit.
Yes. Congress regulates the money supply. Currently they delegate that task to the Federal Reserve system, which is established by Congressional legislation.
Many countries throughout history have deliberately devalued their currencies when they got in an untenable debt situation. It’s not pretty, though.
As a practical matter, no sane person expects (or ever expected) the debt to be paid back, it’s far too large at this point anyway and it’s not a priority. What’s important is that the interest payments are made and that the government has the ability to roll over the current debt and borrow at favorable rates of interest. Once interest payments reach a certain level, then there would be trouble. As it stands now the entire US debt must be rolled over every four years or so. Low borrowing rates help greatly. Normalized or historical rates would be problematic.
Then a cite should be easy to provide. Because I’d also like to hear how the 14th Amendment prohibited fiat currency. Or whatever it is you’re saying.
In secret? Nixon announced it in a primetime televised speech the day he gave the order.
You aren’t simply claiming that Nixon did a certain thing, which is a matter of public record. You’re claiming that this action had a certain legal significance, which is a n unusual claim. You should be able to find cites to back up your opinion on the legal significance.
This is why I do not take your claim at face value. You assert that the President has a lot of power in “financial matters,” and use as evidence that a President changed the price of gold. In fact, the Gold Reserve Act changed the price. My point is that if you attribute the change in the price of gold to an executive action, when in fact it was a very straightforward exercise of Congress’ Art I sec 8 power to fix the value of money through law, then it looks like have a fundamental problem with this general assertion of presidential power.
in effect I did not properly understand the american text in my first reply, so yes there is the difference. Apologies I misread the text.
There is no default if the promised form of the contracted payment is not changed. If the promised form of the payment was in the US dollar then there was no default. The rational actors of the monetary system desired and desire a relatively stable and above all the liquid payment instrument with wide acceptance and predictable behaviour. The US dollar had and has that - imperfectly but better than any other choice in the real world.
No, inflation by itself is not a form of a default.
A surprise and deliberate high level of inflation for the debt in the sovereign’s own money can be a default, but the ordinary inflation is not in any way a default. the inflation as seen in the modern economies from the 1970s is easily built into the financial models and except the weird american gold bugs, easily considered. We think in what is called the ‘real terms.’
No because the sane person who is buying the long term debt of the AAA sovereign or the AAA company expects the sovereign and the company to behave in the rational matter in the financial terms and always carry some level of the efficient debt. The sane person knows that the Company or the Sovereign is not like a personal household and for them the carrying of a certain permanent level of debt is an efficient arbitrage of the current cash flow against the current needs.
The national debt is not a single transaction. It’s an ongoing series of individual debts. The ones that have been made in the past have all been paid back.
Saying “the debt” won’t ever be paid is like saying car loans won’t ever be paid. It’s true but only in the sense that there are always new car loans being started. There will never be a moment when every car loan in the country is paid off but that doesn’t mean people aren’t paying off their car loans.