No, Bitcoin is not the perfect extortion currency. The transactions are public, so the value is traceable. Even if it is moved into one billion accounts which are split into another billion accounts, if any of the money ends up being spent to the accounts of known actors then it can be seized and the purchases can potentially be traced.

I have no doubt that the Secret Service would monitor that account and the transitive closure of the transaction graph involved for the next 50 years if a payment was made to it. Hell, if there is any value currently assigned to that account it is effectively pinned.

The owner of the account would have to work very hard to launder it.

Wouldn't 'laundering' look exactly like 'sending the BTC to any of the dozens of services which store BTC for you in a centralized account, (SR, instawallet, etc) and then withdrawing that same amount? This produces bitcoins not visibly linked to the originals - it's exactly like depositing and then withdrawing money from a bank (a bank which doesn't make a record of people's identity).

If the authorities observe transactions in the block chain sent to known actors (like a centralized BTC bank), the actor can be subpoenaed, raided, or shutdown.

You think? I'm pretty sure they already have sufficient motivation to shutdown Silk Road, which for laundering purposes is essentially a bank. By what mechanism do you propose they raid Silk Road's records, assuming such even exist?

Reminds me of the cypherpunk's 'assassination politics' episode.

(I do not condone assassination)

Episode? Did you mean "essay"? This one, in particular: http://cryptome.org/jdb/ap.htm

Side note: the story of the author of that essay in an interesting one... http://en.wikipedia.org/wiki/Jim_Bell

No, yes, maybe: I meant legal episode of the author of that essay.