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Here is the problem I see with Keynesian economic stimulus.  As SRen mentioned, a recession can occur because of an oversupply of goods that results in relatively less demand.  It can also be caused by a reduced demand that results from other reasons.  For instance, if the public is merely told that a recession is coming by someone they believe, they will reduce their demand just in anticipation of it.  Therefore, society can be jawboned into, as well as out of a recession.  <o:p></o:p> In a recession, if the government had a pile of money in reserve, they could indeed spend it, and that spending would constitute demand.  And fulfilling that demand would stimulate the economy.  On the contrary, if the government raised taxes during the recession, everybody would have less money to spend when they are already reluctant to spend money.  So raising taxes deepens the recession.  <o:p></o:p> The problem is that the government does not have a pile of money in reserve.  So the government must borrow the money that it uses to stimulate the economy.  When it does so, it is ultimately borrowing the wealth that the citizens will produce in the future.  In other words, it is attempting to stimulate the current economy by taxing future production.   <o:p></o:p> Future taxes can be a drag on the present economy just as present taxes are.  The investment aspect of the economy is always looking to the future.  Investment bets on the future.  That is the risk of investment, and the bet is that the risk will be rewarded by profit.  So pessimistic expectations worsen the odds of the bet, and slow an economy or deepen a recession already in progress.  <o:p></o:p> So, today when the government spends money to stimulate the economy, the stimulation is offset by the drag that is produced by future need to pay the money back in the form of additional taxes.  It is like bailing out the boat by scooping water out of the front of the boat and dumping into the back of boat.  That is what I mean when I say the Keynesian economic stimulus is nonsense.  The only thing that is actually stimulated is the growth of government.
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