Translated by Ralph Anzarouth and an anonymous friend
Falsehood is the antithesis of truth. As it is known through authentic research, it involves concealing the truth in one's verbal communication, in order to deceive others. This too takes several forms. One form involves saying something which is untrue by way of joke or fun, like in stories and fictions which never happened. Another form of false speech aims at avoiding damage to oneself, without causing damage to others. This is not so reprehensible, however one should distance oneself from it as much as he can. Others lie in order to deceive their fellow man or make false promises and guarantees. And others have a strong natural tendency to constantly lie and deceive, and concerning these the prophet says (Jeremiah 9, 4): "They taught their tongues to speak lies and persisted in doing evil". And worst of all are those who swear false oaths since there is no greater apostasy, as it is written (Leviticus 19, 12): "And you shall not swear falsely in My name, which is a profanation of the name of the Lord G-d, I am the Eternal", since one who swears falsely is likened to one who declares that he does not believe in Him, Heaven forbid.
Our Sages of blessed memory said by way of exception [to this rule] (Talmud Bavli, treatise Bava Matzia, 87a): "It is permissible to modify [the truth] in order to preserve the peace, as it is written (Genesis 11, 13): 'How can I give birth while I have already reached old age1 . It is further written (Genesis 50, 16-17): "Your father gave instructions before his death as follows. This is what you will say to Yoseph etc.2."
However, one must be very careful to make use of this exception only with the right intention3, as it is written (Ethics of the Fathers 2, 12): "All your actions shall be for the sake of Heaven.
The trait of falsity may be compared to the rodent called mole, which is sightless and crawls under the earth, and as soon as it comes out to the light of day, it dies. In a similar manner, a lie always crawls undercover with the appearance of truth, so that it may be believed. In spite of this, when the light of truth and evidence shines on it, it immediately vanishes and is nullified, since it is discovered and revealed. King Solomon said about this (Proverbs 12, 19): "The language of truth stands forever, while the language of falsehood lasts like the blink of an eye.". He also said (Proverbs 12, 22): "The language of falsity is an abomination to Hashem". He also said (Proverbs 16, 13): "The one who speaks honestly will be loved", as it is written in the prayer of his father King David (Psalms 119, 29): "Remove from me the way of lies". And the Torah says (Exodus 23, 7): "Distance yourself from deceit". And our Sages of blessed memory enumerated (Talmud Bavli, treatise Sanhedrin, 103a) four categories of people who do not receive the Divine Presence and one of these is liars. In the same way as these people deceive [others], so the world confuses them and deceives them, as is brought down in Talmud Bavli (treatise Taanit, 9b): "When Ula visited Babylon, he saw lightning and told Babylonians to take their possession indoor since it was about to rain. In the end, it did not rain etc. He said: in the same as Babylonians lie, their rains also lie". And just as man acts truthfully, so the whole of Creation obeys him loyally and faithfully.
And concerning the truth, our Sages of blessed memory related (Talmud Bavli, treatise Sanhedrin 97a): "Rava said: in the beginning I thought there was no absolute truth in the world. One of the rabbis, Rav Tvut by name, and others said it was Rav Taviumi, would not change his word even if they gave to him all the space in the world. Once he visited a place called Kushta4, where nobody lied and nobody died before his time. He married a woman of that place and they had two children. One day, his wife was at home washing her hair when a neighbor came and knocked on the door. He thought that it was not good manners [to say that his wife was washing], so he said that she wasn't home. His two sons died. When his fellow men came to visit, they asked him what happened. He told them the story and they begged him: "Please, leave this place and do not cause death among these people5".
Notes of the translators:
 Previously, the matriarch Sarah had said to herself "How can I give birth, when my husband has reached old age?"When relating this to her husband the patriarch Abraham, the Lord modified the original version in order to keep peace between husband and wife.
 Joseph's brothers who had sold Joseph as a slave, wished to avoid a rift after their father's Jacob's death and accordingly requested forgiveness in their father's name, even though there is no explicit reference to this in the Bible.
 And never use it as an excuse to falsify the truth.
 Kushta means "truth" in Aramaic.
 That is, to them. As usual, the Talmud prefers to use the third person when saying something unpleasant in relation to oneself.
The whole book Tzemach Tzadik in Hebrew (printed in Rashi characters) can be downloaded in PDF format and read online at Hebrewbooks.org. Chapter 25 about falsehood is found at pages 52-54.