A professional home inspector is required to know very little about electrical systems. Your problem could be as simple as a loose ground wire somewhere or might require the entire house to be rewired to properly ground everything.

Of course, people lived without ground wires for years. They are a safety device. Some electronic devices will require a ground to work properly. You might consider selling your pinball machines and HDTV to pay off some of your debts instead of worrying about that though.

GFCI receptacles work fine without a ground, and they are an acceptable replacement for 2-prong receptacles when no gruond is present.
You cannot just "my inspector says that all I would need to do is to simply drop a grounding wire down to the ground."
The grounds are required to run with the circuit conductors.
It ends up being as much work to run another wire with the branch circuit conductors as pulling in new cable with ground.
It IS a hazard to have 3-prong receptacles when no ground is present, unless they are fed by an upstream GFCI device.
You could use GFCI breakers and leave the 3-prong receptacles in place. You need tp affix stickers that say ÂNo equipment ground and ÂGFCI protected to the 3-prong receptacles fed this way as a warning to users.
Surge protection devices require ground to provide full protection.

There can be problems with electronics when no grounds are present.
Any leakage of the line voltage can end up on the shields of cables.

Usually it is not a problem but it can cause 60 Hz hum to appear.
It is not as prevalent now that lots of TV signals are digital.

OK, so if I plug in a 3 prong appliance into a GFCI, I will still be protected from shock, although I would get the surge protection. It sounds like all I need to do is just replace all the receptacles with GFCI's, and I'll be safe - OR alternatively, replace all the breakers with GFCI breakers. What would be the cost to do either (i.e., per receptacle or breaker)? I figure I could do the receptacle change myself, but would I need an electrician to do the breaker?

I suppose I could ask the electrician to check to see if there is a loose ground wire first. I think that rewiring everything would be prohibitively expensive. Contrary to the first replier, I am NOT going to sell any of my possessions.

GFCI receptacles do not provide surge protection unless it is an added 'feature' by a particular manufacturer.

A GFCI works be making sure the hot and neutral current match within ~0.005 amps (5 milliamps).
If they do not match it opens the circuit in a fraction of a 60 Hz cycle.

It protects against the current going anyplace besides between the hot and neutral.

It is pretty rare to get yourself across the hot and neutral perfectly with no other path for the current to take.

Breakers are not hard to replace, but you need to be aware that even with the main off, the lines coming into the main breaker from the meter are still hot.
If you have another disconnect in from of the main breaker you can kill everything in the main panel.

You do not need to replace every receptacle.

GFCI receptacles have line screws for the input, and load screws that can feed regular receptacles down stream and provide the same protection.

It can be a chore to figure out the order receptacles are fed from the breaker panel and then hooked up.

Your inspector should know this. First (as brickeyee noted), the GFCI does zero surge protection. Second, GFCI only provides human safety.

Third, a GFCI is the only way of installing three prong plugs on two wire circuits. Code then says that GFCI must have this wording glued to that receptacle: No Equipment Ground. Everyone should know that receptacle does not have safety ground.

Fourth, the only connection to earth ground must be at the breaker box. A receptacle grounded to earth is a code violation. It must be grounded to a bus bar inside that breaker box.

Fifth, the critical earth ground for human safety and for transistor safety must be from breaker box to some dedicated earth electrode. Water pipe is insufficient. Code lists the five electrodes that might be used, in Article 250.52. That is earth ground. Which is something completely different from safety (equipment) ground in a receptacle.

"the critical earth ground for human safety and for transistor safety must be from breaker box to some dedicated earth electrode. Water pipe is insufficient."

The actual grounding electrode system is not so much for human safety but lightning and leakage current on pole transformers.

If a metallic water pipe with 10 feet in earth contact is present it MUST be used as the primary electrode.
A second 'made' electrode is required also.

If no metallic water pipe with adequate earth contact is present, a single made electrode can be used, but it must be tested to ensure it is 25 ohms or less to earth.
The test involves driving another electrode (to measure against) so the most common installation is to simply install two made rod electrodes and be done with the job.

> The actual grounding electrode system is not so much for human safety
> but lightning and leakage current on pole transformers.

First Energy, the company that also created that famous NE blackout (NY, Ontario, OH, MI) stopped fixing earth ground to cut costs and increase profits. Therefore people were being shocked in their jacuzzis and swimming pools. The problem was not solved until local governments passed ordinances. $thousands in fines every day someone was shocked. Suddenly First Energy started fixing those transformer ground. Suddenly people were not long being shocked.

Firstmost - those grounds exist for human safety.

This thread has taken quite a turn from the OP's question.

The first thing you need to do is determine if the house is wired with grounds. Just open up any electrical socket and count the wires. You should see black, white, and green/copper. If you only see 2 wires, then you have no ground. That would mean you have to rewire the entire place to bring it up to modern standards. You can install GFCI's for an added measure of safety, but they are not a replacement for missing grounds. If you see 3 wires, then the place is wired with a ground, but something is connected improperly. It could be the physical ground to the earth, but it would be much more likely that some wire just came loose. If it is the whole house, then start looking at the panel. If it is just one room, then look at that branch circuit.

Re your possessions - I'm sure you have justified keeping all your toys while you default on your debts, but it is an immoral position. If you don't have money to pay your bills, then you don't have money for a pinball collection. Sometimes life is tough, but you have to suck it up and do the right thing.

"First Energy, the company that also created that famous NE blackout (NY, Ontario, OH, MI) stopped fixing earth ground to cut costs and increase profits. Therefore people were being shocked in their jacuzzis and swimming pools. "

At 120 V the earth is a very poor conductor.

At the lowest distribution voltage (7,200 volts) it is decent.
It is this leakage from the high voltage primary to the low voltage secondary that needs to returned to the primary side.

If the POCO has not tied the center tap of the transformers down to earth the leakage will appear on the secondary on the grounded conductor.
It will then attempt to return by any path it can find, including things that are incontact with the earth.

The main purpose of earth grounding the already grounded conductor is to provide a path for this leakage.

In a correctly installed and operating system that is the purpose.

An incorrectly installed and operated system can easily create hazards, but the hazard is from the incorrect installation and operation.

The only major blackouts I am aware of in the northeast had far more of the genesis in solar storms creating voltage shifts in the earth itself.
This caused ends of long distance transmission lines that were correctly earth tied to have additional DC currents flowing.
These additional currents caused saturation in transformer leading to overheating and massive failures.

It could even be argued that NOT tying the ends of the transmission lines to earth might have actually prevented the problem.

Over long distances especially at higher latitudes the actual earth potential can be rather from from zero if a geomagnetic storm is present causing changes in the earth's magnetic field.

That First Energy example demonstrates a human safety problem when the local distribution (when First Energy cut costs) was improperly maintained. Once the earth grounds were restored, that human safety problem was eliminated.

BTW, if you do not know the NE blackout - that literally took out electricity in NY, Ontario, Michigan, Ohio, etc, then you do not have any news sources. First Energy created that blackout by doing so many things wrong - all simultaneously. Read the NERC report that describes First Energy doing failure after failure all day to create a 4 PM blackout across all those states. Of course, this is not about grounds. Solar flares had nothing to do with this famous event. Then entire blackout was create by an electric company dominated by business school types who only understood cost controls and knew virtually nothing about electricity. Who would do anything  including run a nuclear reactor with a hole in its containment dome and a potential ÂThree Mile Island problem  because only profits mattered.

You disappoint me if you do not know the so many flagrant failures all directly traceable to management in First Energy - including people being shocked in swimming poles because First Energy stopped fixing transformer ground - that are essential to human safety.

You disappoint me if you do not know there have been multiple blackouts in the NE from power system failures.

The most recent one (1980s?) was from a geomagnetic storm when hydro Quebec lost a major transmission line.

What is the date of the one you are referring to?

Swamp, I suggest you consider the financial advice offered here a free bonus on top of the free electrical advice, and do with it what you will. <grin>

If your house is groundless, for example wired with old ungrounded NM or even knob and tube, a fairly cheap and easy code-legal fix is to replace all the 3-pin receptacles with 2-pin types. IIRC they cost maybe a buck and a half each at the big box stores (somewhat more than the cheap 3-pin as they sell in smaller numbers). Donate the removed 3-pin receptacles to your local thrift store or sell them at a garage sale.

For improved safety I would fit GFIs instead in the kitchen, bath, garage, and cellar. Outdoors too, if you have such. Decent GFI recepts run $10 or so at the big box stores. As mentioned above, mark them "no equipment ground."

Of course you shut off the power before changing receptacles. When wrapping the wires round the recepts' terminal screws be sure to wrap them clockwise - so that when you tighten the screw the wire is pulled into a tighter circle, not spread out. Tighten firmly.

Note that while you are allowed to plug your HDTV into a non-grounded outlet (either 2-prong or 3-prong with GFCI protection), there are certain other restrictions.

You can't legally use the GFCI dodge on certain appliances and power tools with grounded cords.