Moreover, if Paul were not understood to affirm lack of potency, his argument would be without force; for Paul’s whole aim is to make grace necessary to all men, and if they could initiate something by themselves, they would not need grace. As it is, however, they need grace, just because they cannot do this….’Because of transgressions,’ he says; not, indeed, to restrain them, as Jerome dreams, for Paul is arguing that the removing and restraining of sins by the gift of righteousness was promised to the seed that was to come; but to increase transgressions, as he says in Rom. 5: ‘The law entered, that sin might abound’ (v. 20). But that sins were not committed in abundance without the law; but then they were not known to be transgressions and sins of such awful import, and the most and greatest of them were held to be righteousness! As long as sins are unknown, there is no room for a cure, and no hope of one; for sins that think they betoken health and need no physician will not endure the healer’s hand. The law is therefore necessary to give knowledge of sin, so that proud man, who thought he was whole, may be humbled by the discovery of his own great wickedness, and sigh and pant after the grace that is set forth in Christ. (Luther, Bondage of the Will)
The first part of the quote above was to give some context as to why Luther is operating as he does. Luther is out to shred any hope or confidence that a sinner has in self, the righteousness of self, or the will of self in order to show sinners their need of grace, and not just some grace but all of grace. Sinners need to know that they cannot do something of themselves and that they are in utter need of grace. The reason for the way Luther is arguing, then, is to increase the gravity of sin (in the mind of the sinner, not in reality) and the helplessness of man so that sinners will see the utter necessity of grace and of the glory and power of grace. In the modern day it is almost universal that God is thought to respond to what man does, but that destroys (not in reality) the biblical teaching of God as sovereign and therefore of true grace. As long as man is thought to be the one that initiates, man does not need grace (biblical grace). Human beings need grace precisely because they cannot do something. It is grace that comes to man who hates true grace and does not want it. It is grace that begins to work on that heart so that man will see his great need of it and desire the benefits of it even though he still hates grace in truth.
The law, then, came to increase transgressions. It did not come to increase sin because sin is good, but in order that sinners would see and feel their helplessness and then their need of grace. As Luther points out, it was not that people were not committing the sins already, but apart from the Law they did not see them in terms of the number of sins nor the greatness of each sin. The Law, though it stands against sinners and all who sin against the Law are cursed by the Law, is actually a great benefit to those who come to bow before the dictates of the Law and see their helplessness and utter need of grace. Apart from the Law no one would see the true depths of his or her sin. Though it is true that nature alone renders human souls without excuse, but apart from the Law no one will be broken and be helpless before God, which is to say, they will not be led by this tutor to Christ. Apart from the Law no one will see the need to be saved from beginning to end by grace alone.
Instead of showing that God commands and therefore men must have ability to obey the Law, this line of thinking actually goes in the other direction. The Law shows that men don’t have the ability to obey the Law and therefore need Christ alone. The Law shows man that he needs grace alone rather than grace plus something man can give. Until the Law has slain man in his own eyes and he sees his own helplessness, he is like the sick person that thinks he is healthy. He will not want anything to do with the physician and will not listen to the words of the physician until he accepts the fact that he is sick. As long as the person thinks that he has enough health to do what it takes to remain healthy that person will not seek out a true physician. As long as the person thinks that he has enough health to take care of himself (such as an act of the healthy will) he will not seek the physician and will remain proud and secure in his own eyes. But once the light of the Law is let in and the sinner sees his dire condition and utter need of the great Physician, that sinner will seek Christ and will not trust in his own diseased will.
The Law, in one sense, can be compared to a machine that looks inside the person (so to speak). The person can see his or her own diseased organs and with horror know that must befall him. That is the person that will then give up all hope in self and the efforts of self. Woe to those who have ministers who will not preach the Law in order that sinners may see their great deadness of heart. Woe to those who will not behold their own hearts in the mirror of the Law. They will continue on with a dreadful and terminal disease without knowing about it. They will continue on thinking that they have enough health to just make a decision and all will be well. How deceived they really are as they continue to look to themselves to look to Christ rather than looking to Christ alone.
God Loves... Himself 
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