In the US Supreme Court´s case, Perry v. the U.S., the majority decision stated: "We regard it as confirmatory of a fundamental principle which applies as well to the government bonds in question, and to others duly authorized by the Congress as to those issued before the amendment was adopted. Nor can we perceive any reason for not considering the expression 'the validity of the public debt' as embracing whatever concerns the integrity of the public obligations."
The US Supreme Court ruled that the law at issue, "went beyond the congressional power", setting a precedent that as of today, has still not been overturned. The ruling declared that because the government borrows funds based on its, "full faith and credit", Congress doesn't have the authority to undermine that confidence by reneging on its obligation to its lenders.
"To say that the Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise; a pledge having no other sanction than the pleasure and convenience of the pleaor," reads the opinion, delivered by Chief Justice Charles Evans Hughes. "This Court has given no sanction to such a conception of the obligations of our government."
