Here is another quote from David Wells on what happens when the holiness of God is lost.
Holiness is therefore so much more than just a moral code or a set of rules. It is all about what is right because it is all about what God is in his utterly pure being. It is his being in its burning purity that drives us in the pursuit of what is right. And he has disclosed to us in Scripture, in a multitude of ways, what is true and right.
Without the holiness of God, sin has no meaning and grace has no point. God’s holiness gives to the one its definition and to the other its greatness. Without the holiness of God, sin is merely human failure, but not failure before God. It is failure without the standard by which we know it to have failed. It is failure without guilt, failure without retribution, failure without any serious moral meaning.
Without the holiness of God, grace is no longer grace because it does not arise from the dark clouds of his judgment that covered the cross. Without God’s holiness, grace would be nothing more than sentimental benevolence. It is this holiness that shows the graciousness of grace, its character as unmerited, because it also shows us the offensiveness of sin.
Without the holiness of God, faith is but confidence in good fortune, optimism about our prospects, hope in some future happiness. It is not what takes hold of the one in whom God has wrought his propitiation. It is not that trusting in the utter reliability of the good character of God that makes his promises “Yes and Amen” in Christ.
Sin, grace, and faith are emptied of their meaning when they are separated from the holiness of God…That is really what the third mark of the church [discipline] is all about. It is about the people of God showing the same kind of moral seriousness that is in plain sight on the cross.