Electro-optical feedback can produce an in-loop photocurrent with arbi
trarily low noise. This is not regarded as evidence of ''real'' squeez
ing because squeezed light cannot be extracted from the loop using a l
inear beam splitter. Here I show that illuminating an atom (which is a
nonlinear optical element) with ''in-loop'' squeezed light causes lin
e narrowing of one quadrature of the atom's fluorescence. This has lon
g been regarded as an effect that can only be produced by squeezing. E
xperiments on atoms using in-loop squeezing should be much easier than
those with conventional sources of squeezed light. [S0031-9007(98)075
12-7].