[racket] Problem Stream with alternating values

I'm doing this problem:

6. Write a stream dan-then-dog, where the elements of the stream
alternate between the strings "dan.jpg" and "dog.jpg" (starting with
"dan.jpg"). More specically, dan-then-dog should be a thunk that when
called produces a pair of "dan.jpg" and a thunk that when called
produces a pair of "dog.jpg" and a thunk that when called... etc. Sample
solution: 4 lines.

and I cannot for the life of me understand why the following code does
not produce a properly thunked stream. It evaluates the entries until it
runs out of memory

(define dan "dan.jpg")
(define dog "dog.jpg")

(define (dan-then-dog)
  (define (H1 st0 b0)
    (cond
      [(= b0 1) (H1 (stream-cons dan st0) 0)]
      [else     (H1 (stream-cons dog st0) 1)]
      )
    )
  (H1 empty-stream 1))

Can somebody please explain why my understanding of Racket streams is
faulty?

Thanks,
Patrick Sweetman