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The principle of good works offsetting sins is established in
scripture.
James 5:20 "He must know that he who causeth a sinner to be
converted from the error of his way, shall save his soul from
death, and shall cover a multitude of sins."
1 Peter 4:8 "But before all things have a constant mutual
charity among yourselves: for charity covereth a multitude of
sins."
Jesus gave the church the power to grant indulgences.
Matthew 16:19 (Jesus is speaking to Peter.) "And whatsoever thou
shalt bind upon earth, it shall be bound also in heaven: and
whatsoever thou shalt loose upon earth, it shall be loosed also
in heaven."
Matthew 18:18 (Jesus is speaking to all twelve apostles.) "Amen
I say to you, whatsoever you shall bind upon earth, shall be
bound also in heaven; and whatsoever you shall loose upon earth,
shall be loosed also in heaven."
St. Paul exercised this power.
2 Corinthians 2:10 "And to whom you have pardoned anything, I
also. For, what I have pardoned, if I have pardoned anything,
for your sakes have I done it in the person of Christ."