I happen to differ slightly with @RegDwight & @JSBangs on this point.
I believe "as" does not necessarily mean "because" in this context (although it might). I believe it can also be used in the second sense my Webster's gives, which is
2 during the time of being (the thing
specified) : he had often been sick as
a child | as a student, my nickname
So in that respect I believe it could mean that "by comparison to the way I am now (that is, older and wiser), I believed every lying word he said."
I think of the beginning of Dylan Thomas' poem "Fern Hill":
Now as I was young and easy under the apple boughs
About the lilting house and happy as the grass was green,
The night above the dingle starry,
Time let me hail and climb
Golden in the heydays of his eyes
It is clear that what follows indicates a comparison to a later state, not a causal relationship. That is, the narrator of the poem is at a time of life when he is no longer so "golden" as before. The person who believed the lying bastard may mean the same kind of comparison.
Again, let me stress that I'm not saying that as can't or doesn't mean because in the OP's example; I'm merely pointing out that it may also mean something a little different.