A recent experiment with squeezed light has shown that two-photon absorption by an atom can occur with a linear intensity dependence. We point out that this result verifies a prediction made by us a decade back from an analysis of a non-local model of Quantum Electrodynamics. This model had earlier been proposed by us in an ad hoc manner to interpret certain features of multiphoton double ionisation and above-threshold ionisation in an atom placed in a strong laser field ; in this paper we show that the model can be obtained field-theoretically by demanding covariance of the field Lagrangian under a nonlocal U(1) gauge transformation. We also show that the model makes direct contact with squeezed light, and thus allows us to describe these two completely different scenarios from a unified point of view. We obtain a fundamentally new result from our non-local model of QED, namely that only the past, but not the future, can influence the present -thus establishing a non-thermodynamic arrow of time. We also show that correlations within a quantum system should necessarily be of the Einstein-Podolsky-Rosen (EPR)-type, a result that agrees with Bell's theorem. These results follow from the simple requirement of energy conservation in matter-radiation interaction. Furthermore, we also predict new and experimentally verifiable results on the basis of our model QED.