@Tutanota I have a flash drive on my keyring (the one holding the house key), with a LUKS encrypted file system on it, to be mounted using the loopback device. The password is also on it but GPG encrypted, and my GPG keyring is not on this flash drive. The flash drive was reformatted so it contains an EXT4 file system, so someone plugging it in might not even be able to get started. Would that be illegal? I use it as an "in case the house burns down" backup.

@bzdev @Tutanota Legality aside, something like VeraCrypt which is built to be plausibly deniable would probably be a better means to this end. Having a hidden LUKS filesystem obscured by an EXT4 filesystem would get in the way of somebody naive, but wouldn't do anything to get in the way of a forensics expert or even anybody who has had to recover deleted files before. An expert will take an image of the full drive before doing anything and will take special care to examine unallocated space, and the LUKS header is easily discernible (unless you store that header detached on another device).

Legally, if they you are in a jurisdiction where authorities can compel you to decrypt encrypted data, it's illegal for you to not do so. The question becomes whether you can get away with that illegal thing, or feasibly hide the data in a way that is undetectable. Your way is very detectable. There are also some disagreements on the value and merits of plausible deniability, though; see the luks FAQ that discusses this.

@taylor @Tutanota What I set up actually works quite well in practice. The data I'd want to protect are things like passwords for my bank & the text of a book I'm working on (don't want it public until I get a copyright but am still editing it). At an airport or whatnot, if some "security" guy wants me to decrypt it, I can legitimately say I can't because I'd have to go home first. And of course, I'd demand a search warrant, which gives me a paper trail.

@bzdev @Tutanota Well yes, but you don't have to hide the volume for that. Do you want it hidden to the point that nobody could prove that the data is actually there, or do you want it clearly encrypted, relying on the fact that you are unable or unwilling to decrypt it at that point in time? I just don't see much point in the decoy EXT4 filesystem without going all-in on plausible deniability. Non-expert tamperers aren't going to be able to access the data in the encrypted filesystem either way.