  Transition disks, with inner regions depleted in dust and gas, could
represent later stages of protoplanetary disk evolution when newly-formed
planets are emerging. The PDS 70 system has attracted particular interest
because of the presence of two giant planets at tens of au orbits within the
inner disk cavity, at least one of which is itself accreting. However, the
region around PDS 70 most relevant to understanding the planet populations
revealed by exoplanet surveys of middle-aged stars is the inner disk, which is
the dominant source of the system's excess infrared emission but only
marginally resolved by ALMA. Here we present and analyze time-series optical
and infrared photometry and spectroscopy that reveal the inner disk to be
dynamic on timescales of days to years, with occultation of sub-micron dust
dimming the star at optical wavelengths and 3-5 $\mu$m emission varying due to
changes in disk structure. Remarkably, the infrared emission from the innermost
region (nearly) disappears for ~1 year. We model the spectral energy
distribution of the system and its time variation with a flattened warm (T <~
600K) disk and a hotter (1200K) dust that could represent an inner rim or wall.
The high dust-to-gas ratio of the inner disk relative to material accreting
from the outer disk, means that the former could be a chimera consisting of
depleted disk gas that is subsequently enriched with dust and volatiles
produced by collisions and evaporation of planetesimals in the inner zone.
