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Why did God create a new covenant? It seems as if he had a covenant set in place in the Old Testament and provided a means for Israel to follow the covenant and offer sacrifices to atone for their sins. Why did he create a new covenant in the New Testament which is the basis of Christianity? Did mankind or God change in a way that a new covenant needed to be set up?

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If God had created Christianity first, people would not have known their need for a Saviour. "What do we need to be saved from?

So God first sets up a do-it-yourself religion; by which I mean that if the Jews followed all the laws they could save themselves earning their right to heaven.

That didn't work. Worse, some people became more interested in the laws than the purpose of the laws:

Matthew 23:23-24

“Woe to you, teachers of the law and Pharisees, you hypocrites! You give a tenth of your spices—mint, dill and cummin. But you have neglected the more important matters of the law—justice, mercy and faithfulness. You should have practiced the latter, without neglecting the former.

You blind guides! You strain out a gnat but swallow a camel.

See also: a brief summary of how salvation works.

But now people could at least compare their standards to God's and realise the gap between themselves and God:

Romans 3:23

for all have sinned and fall short of the glory of God

If you want to read more about this, the book of Hebrews explains more about how Judaism (and particularly the law) was a shadow of the forthcoming revelation. For example, the animal sacrifices in Judaism teach us that a sacrifice is required for the forgiveness of sins. This is how we can understand passages like this:

Hebrews 9:23-28

It was necessary, then, for the copies of the heavenly things to be purified with these sacrifices, but the heavenly things themselves with better sacrifices than these. For Christ did not enter a sanctuary made with human hands that was only a copy of the true one; he entered heaven itself, now to appear for us in God’s presence.

Nor did he enter heaven to offer himself again and again, the way the high priest enters the Most Holy Place every year with blood that is not his own. Otherwise Christ would have had to suffer many times since the creation of the world. But he has appeared once for all at the culmination of the ages to do away with sin by the sacrifice of himself. Just as people are destined to die once, and after that to face judgment, so Christ was sacrificed once to take away the sins of many; and he will appear a second time, not to bear sin, but to bring salvation to those who are waiting for him.

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<removed obsolete comments> –  Caleb Sep 26 '11 at 20:29
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Jesus was Judaism fulfilled. Judaism made perfect. The prophet Daniel foretold the coming of the messiah and in Christ his prophecy was fulfilled.

Daniel 7:13-14

New International Version (NIV)

13 “In my vision at night I looked, and there before me was one like a son of man,[a] coming with the clouds of heaven. He approached the Ancient of Days and was led into his presence. 14 He was given authority, glory and sovereign power; all nations and peoples of every language worshiped him. His dominion is an everlasting dominion that will not pass away, and his kingdom is one that will never be destroyed.

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The original question got closed and merged into this one. You might need to update your answer so it makes any sense here. –  Caleb Sep 26 '11 at 17:13
    
Hope I can get some of those down votes back (-; –  Neil Meyer Sep 28 '11 at 11:34
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You've actually got it inside out. There's a lot of evidence, both from biblical and extrabiblical sources, that the basic ideas of Christianity were around from the beginning. (See When did Christianity originate? for just a few examples.) The "new" covenant was the Law of Moses, which was given to the people of Israel--at the time a rowdy group of recently-freed slaves--after they demonstrated that Moses literally could not leave them alone for long enough to go up Mt. Sinai, get some commandments from God and come back down without them falling into degenerate heathen fertility-worship.

These were people with no chance of successfully living the high principles of the Gospel, so God gave them a lesser law that focused strongly on physical, tangible things, as a "schoolmaster" to point their minds towards Christ and his atoning sacrifice. (Galatians 3:24-25) Christ fulfilled the Law, and it was no longer needed, so they went back to the original covenant and the original Law of the Gospel. (And by this time the observation of the Law of Moses had been twisted by Jewish leaders to the point where it was a lot closer to "worship of the Law" than "worship of the Lord" anyway.)

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God made several covenants throughout time with different people or groups of people, including Adam, Noah, and Abraham.

So, after the initial covenant with Adam, we could ask why a new covenant was made. The answer is that the first covenant was broken by Adam. With Noah, it wasn't that a previous covenant was broken, but that God made it clear that He would never destroy the earth with water again.

The covenant with Moses and the nation of Israel was in effect for around 1500 years, from the time of Moses to the time of Christ. Now it could be argued that it is still in effect with the nation of Israel, I know.

This covenant involved the obedience of the people of Israel to the Mosaic Law and God's blessing or curse based on that obedience. However, the covenant never achieved righteousness in the blood of bulls and goats (as Hebrews states).

During this covenant, an new covenant was spoken of. The New Covenant was initiated with the resurrection of Jesus and replaces the old covenant. This is a better Covenant in that it does impute righteousness to mankind and brings forgiveness and redemption. The old covenant was put in place as a tutor to bring us to Christ.

So, God created several "new" covenants throughout history for various reasons. The newest of them is the New Covenant in the shed blood of Jesus, as He indicated at the last supper. It's a better covenant in that it is eternal and in that is brings redemption to mankind.

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The Bible is a pretty thick book when you come right down to it. Yet, so few spend any time researching 3/4's of it, while relying on the end to interpret the beginning. That is not how one should read any book. The plan of God is not written backwards. So the question is "Why did God give a 'New Covenant'"? Well, believe it or not, the answer flies in the face of all Christianity.

God promised/made a blood covenant with Abraham that his descendents through Isaace would possess/inherit the land of Israel, did He not? Yet, we see God going back on the covenant when He Divorces the northern kingdom of the House of Israel because of their unfaithfulness. The prophets are all over this. In Jeremiah 3:8 we see the divorce decree given and "a people who were His people, are no longer His people". That is why you read, "A people who were not my people, will be my people" That is not about the "gentiles". That is about the divorced wife, the House of Israel. Read Jeremmiah 31:31-34 very closely. The New Covenant is to them, and no one else. Read Ezekiel 36:22-27. Again, House of Israel. Jesus said, "I've ONLY BEEN SENT to the House of Israel".

Paul says "You who were once Gnetiles and Strangers, are not brought nigh and are no longer aliens but are fellow citizens to Israel." Read the Book, all of it.

Jesus came to satisfy the debt required of the Law of Marraige and Divorce. He divorced His bride, and cannot remarry her, yet He said He would, read Hosea 1&2. However, if He died, then the wife is free to remarry. Romans 7. He did just that, and now the bride, House of Israel, is making herself ready. There is no "church". That has been inputted into the word by antisemitic man. The prodigal son parable difines TWO brothers. One never left. Every heard a message on the brother who never left? You won't because it doesn't fit with Christianities doctrine. Yet, none the less, this is Judah, and the brother that left is the House of Israel. Read the Book.

The House of Israel IS the Multitude of the Nations/Ephraim. Ephesians 2, read it carefully. The New Covenant is because the first was broken via divorce of an unfaithful wife.

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