Yes LN enables swift low cost transactions but the importance of L1 is even greater in the context of the overall economy. L1 Bitcoin enables a very different model of capital accumulation and allocation. One that is a free market with all participants treated equally without fear of favour. Unlike fiat where the government and banks operating under the central bank enjoy the privilege of issuance and seigniorage. Private banks under fiat can issue new capital out of thin air. This gives them a significant advantage over other participants in fiat economies who must accumulate savings or apply for fiat debt finance from the banks.

Where for profit banks are allowed to issue fiat debt funding for non productive purposes, as they have been since neoliberal deregulation, they can profit easily at low risk by funding non productive investment in real estate- this is a safer investment than investment productive infrastructure or assets but it does not recompense for the debasement that occurs on every occasion fiat debt funding is issued. This has led to declining productive infrastructure and assets and a rise in capital allocation to debt leveraged non productive assets.

A Bitcoin Standard does not create such perverse and counter productive capital allocation incentives- for any project to attract capital investment under a Bitcoin standard it needs to be presenting a convincing opportunity to earn a return greater than the general rate of increase in economic activity- ie outperform the risk free holding of Bitcoin as a liquid store of capital.

Without the considerable leverage of debt that fiat debt funding has provided non productive asset prices would fall to their utility value- there would be much less incentive to hold them as a hedge against inflation, as in the absence of fiat debt issuance monetary inflation is no longer present. The over allocation of debt/capital to real estate would be curtailed and more capital would be held in liquid form as Bitcoin or allocated to productive purposes. Capital allocation would be decided by those who accumulate savings, not those who have the power under fiat to issue new currency into circulation via the bankers privilege of fiat debt issuance.