ESV - 44 And the one who falls on this stone will be broken to pieces; and when it falls on anyone, it will crush him.
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I think the key to understanding Jesus' statement about the stone is contained in verse 31 & 32. John came proclaiming the gospel and calling people to repent. The Jewish leaders heard and hardened their hearts but the prostitutes and tax collectors heard and repented. They were entering the kingdom of God ahead of the Jewish leaders. Jesus is the “cornerstone” of God’s salvation plan that brings the kingdom of God to earth. Everyone who encounters Jesus through the gospel message must make a decision. Will they believe or not? John the Baptist brought the message, some believed and some didn’t. In the parable of the 2 sons, one said he would go but didn’t; the second one refused initially but changed his mind and went. In the parable of the tenants, the people of God kept rejecting the messengers he sent (ie the prophets) and then killed the son (prophesying Jesus own death). In my view, the people who stumble over the stone (Jesus and his gospel message) are those who hear the gospel, are convicted of their sins and with a broken and contrite heart, come to faith in Jesus as their personal saviour. Our old life is broken to pieces (dies) and we receive the gift of a new eternal life. Those who hear the gospel message and harden their hearts and reject his salvation, will face his judgment when he returns. Everyone who rejects him will be crushed (destroyed in hell) for all eternity. Every human being faces this choice. What will we do about this cornerstone, Jesus? Will we in humility allow our pride to be broken, or will our pride harden our hearts? The consequences of this decision last for all eternity. No one can avoid this stone. Jesus is the only way to enter the kingdom of God.
I would say that, in this verse, Jesus was evoking the imagery contained in Isaiah 8:14-15, in which God said that He would become a rock of stumbling and a stone of offense to the people of both Israel and Judah, who had (at that time) forsaken the worship of God (figuratively represented as the stone which the builders had rejected), and were bowing down before false gods, and consulting wizards and mediums. Jesus was saying that this scripture was again being fulfilled in His day, by the way in which the Jewish religious authorities (the new "builders") were rejecting Him as the Messiah (the new "cornerstone"). Just as the people of Israel and Judah in Isaiah's day either stumbled (by ignoring the worship of God) or would be crushed (through being invaded and exiled as a judgment from God), those in Jesus' day would stumble (and become figuratively broken in God's eyes) as a result of failing to recognize Him as the Messiah, and ultimately be crushed (destroyed) by the sacking of Jerusalem in AD 70.
Going back to Daniel 2 prophecy will help us better understand Jesus' words in Matthew 21. Nebuchadnezzar’s dream recorded in Daniel 2 was of a statue, which symbolizes the world history (Daniel 2:31-45). Most Bible scholars (including many of the Protestant Reformers), agreed that the statue represents world kingdoms: the gold head (Babylon), the silver arms and breast (Media-Persia), the brass belly and thighs (Greece), the iron legs (pagan Rome), the iron-and-clay feet and toes (the divided nations of Europe). Unlike the first three kingdoms, whose metals cease with their demise, the iron of the fourth kingdom remains until the end of the world, even if the feet and iron toes are mixed with clay (Daniel 2:43). The statue, symbolic of this world, will be destroyed, crushed by the stone cut out without hands, and nothing will be left of these earthly empires (Daniel 2:35). Everything of this world will be gone, crushed by the “rock cut out of a mountain, but not by human hands” (Daniel 2:45). Only remaining will be those redeemed by Jesus, those with a broken spirit and a contrite heart (Ps 51:16, 17; 34:18) covered and transformed by His righteousness (Rom 3:22). Everything else will be “like the chaff of the summer threshing floors” that the wind blows away and no trace remains (Daniel 2:35). So, the Stone is Jesus Christ quoting (Psalm 118:22) - the stone which the builders rejected has become the cornerstone (Matt 21:42; Eph 2:20) “And whosoever shall fall on this stone shall be broken: but on whomsoever it shall fall it will grind him to powder.” (Matt 21:44) This is the second coming of Jesus Christ appearing in all His glory and power - the dreadful and terrible Day of the Lord (Zephaniah 1:14-18) — coming to set the record straight unto all the world. A dreadful and terrible Day for those who choose to reject the True God, but a Day of joy for those who have waited and watched for His coming (Isaiah 25:9)
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