Why are there two prong and three prong Plugs

I have an older Techniques tape deck that does not have a ground just a two prong plug my Cable box also has a two prong plug.
I am trying to understand about ground loops this is a problem I am trying oh-so hard to eliminate in my system.

I hear about cheater plugs to eliminate this problem by essentially eliminating the ground and using the same two prong approach but rendering the system potently lethal.
As I have Mono blocks a preamp an a myriad of other he end hi Fi related components, I am wary of un grounding all of them, as the cost to replace them if something did go wrong is unthinkable, not to mention the explanation to the wife on how it really cost 20 grand and not 5 grand is gonna be difficult.

I have read that they double insulate the Chassis of these two prong units (I will not use the term ungrounded as I am sure that statement is incorrect) so why is the two prong approach not used by all components would it not cure this ground loop concern?

In addition to the above I am trying to install (By a licensed Electrician) a dedicated circuit I have read about a balanced power delivery system but this may cause an ungrounded (Two Prong) units to become "live"

Can someone please explain in layman terms the theory behind a balanced power feed as opposed to a regular feed, how to install one, and is it a viable option.

I know Equitech makes balanced power units but they are way too expensive for me.
But in saying that can you balance the power after it leaves the receptacle in the room, and will this eliminate a ground loop problem.
Will this become a true balanced power feed (as far as the component sees it).
Moreover if you have a UNDEDICATED power feed will balancing it after the receptacle make any difference to ground and other line noise.
Concerning your ground loop, I suggest you peruse the Jensen Transformer web site. http://www.jensen-transformers.com/ Line level isolation transformers safely break the ground and thus eliminate the ground loop.

A ground loop is formed when various components of a system are grounded at different points and some of the ground points are at different voltage potentials. This difference in potential allows current to flow in the ground conductors.

You may be able to eliminate the ground loop by cleaning and tightening all the ground contacts in the circuit your system is connected to.

I think you are wise in being wary of the "cheater plug" approach.

Good luck,
Ok here it goes.

A dedicated line may take care of your problem if all of the equipment is fed off of it. I would recomend a 20Amp ckt using 10/2 copper. Another issue can be a TV connected to the system and TV cable. I took a look at your system and am assuming you use it only for music.

Balanced power will not take care of a ground loop problem.

In short the 220/240 coming into our houses is balanced power 2 110/120 legs out of phase creates 220/240. For 110/120 balanced power you need a unit that has 2 transformers. 110/120 into each that give 50/60 volts AC out. One signal is out of phase with the other. The unit then applies one 50/60 volt signal to the positive leg of the device and the other to the common leg of the device. Balanced power is great for canceling noise on the line.

If you have questions or would like a more indepth explination please email me through audiogon. That is the just of it though.

Yes balanced power units are expensive.

Good Luck.