Let me explain the situation in terms that relate to me. I am a person of Ashkenazi Jewish descent. This may come as a shock, but the Jewish people aren't exactly the safest from discrimination. Yes, I refer to myself as a Jew because that is what I am. My friends can call me a Jew, because that's what I am. When someone calls me something like a dirty Jew, that's a bit different. They're not just casually pointing out my ancestry and my current state of hygiene; they're trying to insult and belittle me based on my cultural identity.
Same goes for LGBT people. If your friend is homosexual, for example, then they're gay. It's ok to call them gay in the proper context, because that is what they are. When you change the context, however, and you're using someone's cultural/sexual identity as a verbal weapon against someone, that is not acceptable. I'm all for free speech, but when you start infringing upon the happiness of others by using their race, religion, sexuality, etc. as an insult, that's just really not ok.
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