There are two huge problems with stimulus spending
- It prevents prices from adjusting down to the point that they need to in order for the market to finally reach a recovery stage
Prices are bid up in a boom, they need to fall to such a point where people will buy again. For instance when the bust occurs people will likely lose their jobs, others will fear that they will lose their jobs, so they will stop spending so much and increase their personal savings. This means that prices need to fall to such a point where people are willing to spend again. Stimulus stops this from happening, it helps to bolster projects, and projects upon un-economical activities
- It distorts the market which will lead to problems when stimulus is cut off
The structure of production aligns itself with the stimulus spending, businesses are used to providing for people with the income provided for them by the stimulus spending, so what happens when the people who were receiving stimulus lose a good portion of their income? This leads to a mini-recession as well as an additional degree of fluctuation with prices in general including industries that were funding the government.
For a somewhat tangential elaboration in another post of mine where I describe more about ABCT and Keynesian theory as well as problems in the Keynesian system see here
If you have more questions or if this doesn’t fully respond to your problems then let me know.