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I think it's cute. Libby was our joke name for Liberty (our dd was due on July 4th). After discussing it, we actually liked it as a nn for Elizabeth. I preferred Bess or Betsy (to honor Elizabeth "Betsy" Ross, ha), but they're awful with our surname so that's why we briefly considered Libby. I think I've only known one person named Libby while I can recall many people named Lisa, Beth or Liz.