But that’s not what he was saying. He was saying from one perspective, in one sense, we are just. In another sense, from a different perspective, we are sinners; and how he defines that is simple. In and of ourselves, under the analysis of God’s scrutiny, we still have sin; we’re still sinners. But, by imputation and by faith in Jesus Christ, whose righteousness is now transferred to our account, then we are considered just or righteous. This is the very heart of the gospel.
Absolutely nail on the head.
What we are under God's Law is a sinner, a wretch, sinful, broken, helpless in our unrighteousness. As Luther writes in the Heidelberg Disputation, "The Law says 'do this', and it is not done". The Apostle St. Paul explicitly says that no one can be just under the Law, for the Law brings with it the condemnation of sin. As long as we bear this body of death, this mortal corruptible flesh, we are sinners (not because the body is evil, but because we came into this world dead in our trespasses, inheriting the fallen humanity of Adam).
But by the grace of God we have been freely justified, for God in His kindness has justified us, imputing to us the alien righteousness of Jesus Christ. And so the Apostle can say that "In the Gospel the justice of God is revealed", by which the Apostle does not mean the condemnation of the Law, but the justice of Jesus Christ by which men are made just, and so, "the just live by faith". This is the righteousness apart from the Law that is through faith.
And so the Christian is, under the eye of the Law a condemned sinner; but by the imputed righteousness of Christ that is by grace through faith, a holy, perfect, righteous saint.
Caught in the paradox of the Simul, we are sinner-saints.
-CryptoLutheran