Now imagine that Tether, instead of waiting for someone to give them a dollar to print one USDT, printed billions of them and said "yeah don't worry they were paid for they're backed. Trust us" and then never opened any of their books to anyone but a single unknown audit company that is basically owned by one of their friends.

Also imagine that they took the actual money that was given to them and, instead of keeping them in a bank account, said they were going to invest them. (Or did not say it, and did it anyways). Imagine they invested it in amazingly profitable sectors like the housing market in China which is definitely not crashing right now.

Tether isn't backed.