What is USDT backed by?

Could you possibly elaborate on the collateral backing USDT? I've heard it's a stablecoin, but I'm not entirely clear on what exactly it's backed by. Is it fiat currency, gold, or some other asset? And how does this backing mechanism work to maintain the stability of its value? I'm quite interested in understanding the intricacies of this cryptocurrency and how it fits into the overall financial landscape.