Bending the record a bit there. Luther was given the opportunity to recant some of his writings, and said he wouldn't because if he recanted some it would be used against him by Rome to refute all. Right, wrong, or indifferent there was a compromise position available and he wouldn't do it.
Charles V branded him an outlaw. Appeal to Caesar, that's how it goes.
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What Reformation day is though, is the day we celebrate the start of the "rediscovery" of the Scriptures and the reforming of a corrupted church.
It's two sides of the same coin. The schisms happened - you can't get away from it just because you sympathize with one side. That Rome was wrong doesn't make the Reformers right. This shouldn't be a celebration - it should be a day of sadness for Rome, sadness for Luther, sadness for the commingling of church and politics, sadness for corruption and oathbreaking, and a day for all Christians to repent and pray for reconciliation in the body of Christ.
That's the biggest issue I see - people want to only look at this day as something that reinforces what their particular group believes, and disregard the disunity it spawned. A day where Protestants got away from those corrupt Romans. If we just stop and look back at what has happened as a whole, it is not good. Today we have denominations that believe anything and everything, and all of them point to this day as the beginning of their justification. There are even Lutherans today who will not concelebrate with other Lutherans, much less the differences between the various denominations.
Luther wasn't the cause of all of this... if it wasn't him, it would have been someone else.
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The problem of course, is how do you make reforms in a way that doesn't upset the Pope, who at that time, saw himself as "above the state itself?" Lutherans argued then and now that when the claim of another church is "Scripture + XYZ" are the infallible sources or standard, it is always the "XYZ" that is the true standard.
This is true. The underlying problem is the claims of the bishop of Rome. It is the same as the 1054 schism, same as Pope Victor throwing his toys out of the pram in the second century over the date of Pascha.
The problem is when you destroy all authority above the individual level, you get a collection of individual authorities. Luther took a pickaxe to every level of church authority which lead to unchecked divisiveness and innovation. Calvin even wrote that Luther would not have been happy with the Lutherans shortly after his death.
Luther taught the importance of the sign of the cross, for annual auricular confession (even if to a layperson) in the Church, written prayers, a structured liturgy, the perpetual virginity of Mary the Theotokos, and rejected the idea of the invisible Church as it is taught today*. He considered Zwingli and others who rejected the real presence in the Eucharist as fanatics. He taught infant baptism and vehemently opposed the Anabaptists. He rejected the idea of the Jewish people returning to the Holy Land or Zionism. He openly criticized iconoclasts. Yet look at where we are today. Luther would probably not be in theological harmony with most Lutheran synods today - and absolutely not in a few - and definitely not with the majority of Protestants in the US.
There's a big cognitive dissonance lurking here.
Edit to add. Luther had no issue spoking of the spiritual bond of the church, or using the word invisible, usually as a cognate of "spiritual", dwelling in the spirit. At the same time he consistently insisted church is visible and recognizable through the marks of the church - pure Gospel and sacraments, or saying things like "there must be some visible sign or indication somewhere whereby this [invisible] kingdom may be recognized."