"liquidity" refers to how quickly money can move to where there is demand for it. That's all. The lack of liquidity under a gold standard was a primary reason why there was demand side deflation and severe liquidity shocks, creating the famous deflationary spirals. if you divide up the money supply between different layers (and there's friction moving between them) that reduces the liquidity in any one place. so a "liquid layer" is one where money can easily flow to where it is needed without friction. The Assholes Who Run the World leveraged those liquidity problems to get off the gold standard and take complete control of the money supply. but that doesn't mean that those problems are completely dismissible. a hard cap is a knee jerk reaction to their fiat insanity. it is not good monetary policy.

also correct that the lack of liquidity under gold probably means that Monero isn't inflationary enough to be a base money without an L2. but I never expect to see that happen. (in my lifetime anyway)

So here s the problem you just contradicted yourself in the first 2 lines. If you define liquidity as the speed at which money can move and you argue that deflationary shocks (I'm assuimg you mean great depression) was caused by the slow movement of gold that can't be. At that point the dollar certificate was 40-55% backed by gold and moved across the monetary system at the speed of telecommunications. Usually the argument about liquidity is about the flexibility of the money supply. People argue that golds supply growth wasn't elastic enough.

So you're not expecting things to actually ever change? Are you just blackpilled?