I fight back -> They put me to jail (as they always do) -> I get it in the ass.

No matter what you do: You always get it in the ass

Cold storage baby!

Fixed that for you:

You don't actually believe in Prism, do you?

Wake up! This is the country you live in: http://www.youtube.com/watch?v=-Rdi_RNRpdk
The country of the bug fucking liar Obama.

thats exactly how its done

exactly, it's completely decentralized - as long as you get access to your private keys, you can also spend the currency - and you can store your keys not just online or on digital media, so the "taking away" part is hard to implement - the primary weakness are going to be the exchanges, because they're acting as the interface and they are the "central" and non-anonymous part of the whole system, which is however essential to actually see a crypto-currency adopted.

localbitcoins et al are just meeting places, there's no longer any point in using and supporting them once you have a certain network of trusted peers who you can go to to exchange bitcoins at much better rates, without having to pay fees to a 3rd party. Also, they're acting as potential attack vectors for people interested in how much trading you are doing, just think about it: a government agency could definitely figure out who you are by going through the corresponding logs, unless you are only using tor and anonymous mobile phones, and only use cash to settle transactions.

Once you know 10-20 people who are able to exchange 1k-2k USD per day, there's no reason why you shouldn't be able to use them all, if you need to. Each of them will have a fraction of your capital.

my brainwallet will be literally "i invoke my right to silence" with 0.001btc inside

so where they think i am saying i won't tell... im actually telling them.. their just not listening.

but thats all hyperthetical and a comedy moment for you armchair youtube anarchists. that think the world is out to get you at every turn.

in reality unless you personally are doing something illegal you have nothing to fear