Mark ups pay interest costs

Everyone is interested in a new paper, the evolution of price over cost as time progresses. I compare their chart on mark ups with some chart from Fred that matches.  I find interest charges match mark ups, and that makes sense.

Look at the red line above, federal interest charges.  Look at the red line below, price mark ups above cost.

When interest charges rise, mark up rises. It is a bit asymmetric, mark ups mostly rise as interest charges rise but lessly drop when interest charges drop.

The channel is the one Prof Sims argues, the theory of the federal price level.  Firms have to compete for money with government. The willingness of taxpayers to pay ever higher interest charges means that corporations have to compete with higher margins.  The net result is that government creates monopolies to match it own monopoly.