Yes, the movies are accurate but still somewhat misleading. They leave you with the impression that only gold, or some real tangible good, can back “real” money. What they don’t tell you is that debt is backed by the promise to repay, and that promise has to be credible for the money to be lent. So, when they give the example of a banking system lending out $100,000 on $1111.12 in starting capital, what they are not telling you is that there are dozens of promissory notes—people’s pledges of good faith—that they will in fact repay the loans. Even though there is no tangible thing backing the dollar borrowed, there is a pledge of an equivalent amount of labor.
In order for the system to collapse, everyone in the system has to welsh on their promise to honor their debts with an equivalent measure of goods or labor. So while “fiat” currency is not backed by gold, it is backed by the full faith and credit of the entire nation—which is actually more secure than a currency that is backed by some commodity like gold, diamonds or oil, whose price can fluctuate depending on available supplies and demand. It is this guaranteed stability of the fiat dollar that provides the “soundness” and value of the currency.
Money is ultimately based on credibility and trust, not commodities.
This system can, of course, be pushed to the limit by banks who disregard traditional creditworthiness tests and begin lending money to people who cannot repay, secure in the knowledge that when the bubble they have created comes crashing down, they will be bailed out by the central government who, in turn, are backed by future generations of taxpayers. As citizens we are well within our rights to demand regulations that prevent this sort of deliberate predation on the part of banks. Unfortunately, whenever an enterprise becomes “too big to fail” the power is all on their side—especially, when bankers can buy off Congress and immunize themselves against public accountability.