The inspector said the house is a 2 wire, no ground, system and that adding a third wire is expensive. This makes it harder on modern electronics like computers, TVs, DVD players, etc. He suggested using a power strip on everything to provide a cheap minimum breaker. The equipment would still get damaged, but not as bad. Also, adding a GFCI in the kitchen, bathroom, or outside as City Code requires would require a ground wire to be effective.
These are links investigating adding a ground wire.
Adding a Ground Wire to Old Circuits
What to do with old 2-wire cable?
Ungrounded 3 prong outlets
Need more research