In this interview Madoff confesses that technological deflation (lower operating costs for brokers, managers, and bankers) caused the tremendous inflation of the early naughties.  The automation of decision making and data processing caused trading commissions to drop, thereby forcing banks into greater risk taking in order to compete for profits.  Madoff is one of the few people I would trust on this topic, since he proudly asserts the wolfishness and desperation that under any circumstances govern economics.  

If he's right, the overproduction of financial services might well have surpassed the overproduction of, saying, housing.  If so, we can expect the deflation of the former to be much more severe.