Paradoxical Passages #2

This is the first passage in the Bible that I really read. I mean REALLY! I had looked in the Bible lots of times. But I had never really read it. Note the verse that says "even the demons also believe and tremble." That word believe is the same word that you find in John 3:16.

What good is it, my brothers, if a man claims to have faith but has no deeds? Can such faith save him? ... faith by itself, if it is not accompanied by action, is dead.

But someone will say, "You have faith; I have deeds."
Show me your faith without deeds, and I will show you my faith by what I do.
You believe that there is one God. Good! Even the demons believe that–and shudder.

You foolish man, do you want evidence that faith without deeds is useless? Was not our ancestor Abraham considered righteous for what he did when he offered his son Isaac on the altar? You see that his faith and his actions were working together, and his faith was made complete by what he did. And the scripture was fulfilled that says, "Abraham believed God, and it was credited to him as righteousness," and he was called God's friend.

You see that a person is justified by what he does and not by faith alone.
In the same way, was not even Rahab the prostitute considered righteous for what she did when she gave lodging to the spies and sent them off in a different direction?

As the body without the spirit is dead, so faith without deeds is dead.

- James 2:14-26

This passage had me stumped for a long time. To the best of my understanding, this is telling us that it is possible to have a fake faith. And the only way to tell is whether or not you are doing something about this faith. Real faith produces a changed life.