We will observe ourselves creating AGI, and see the AGI creating a simulation to understand its own nature and its past, and that simulation will contain us, observing ourselves creating AGI; there is no way of knowing how deep into the loop we are
A simulation can behave "as if", producing the results of a behavior without actually implementing the behavior. You can simulate physically impossible things in this way.
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Ok. Why is consciousness obviously "simulated"? I observe consciousness arising from a specific species of physical system (brain/body).
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You don't actually observe physical systems, but mental simulations of them. Some of these simulations can explain the creation of dynamic models of virtual agency, which are being used by a physically realized system to control its behavior. Your self is virtual.
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