Liar

My daughter is a con artist. Lilly seems to think up the most extravagant stories and tries to play them off as truths. I first thought of this as somewhat entertaining, as a chance for her to put her fabulous imagination to use, if you will. But it has now crossed the line of story-telling to flat out lying. She gets very offended when I call her out on her "fibs" but I want to make it crystal clear that she cannot get away with lying. I worry that I have a demon child on my hands! EEEEEEEK!