The state mixings necessary to mediate three new optical nonlinearities are shown to arise simultaneously and automatically in a 2-level atom with an ℓ = 0 ground state and an ℓ = 1 excited state that undergoes a sequence of electric and magnetic dipole-allowed transitions. The treatment is based on an extension of dressed state theory that includes quantized electric and magnetic field interactions. Magneto-electric rectification, transverse magnetization, and second-harmonic generation are shown to constitute a family of nonlinear effects that can take place regardless of whether inversion is a symmetry of the initial unperturbed system or not. Interactions driven jointly by the optical electric and magnetic fields produce dynamic symmetry-breaking that accounts for the frequency, the intensity dependence, and the polarization of induced magnetization in prior experiments. This strong field quantum model explains not only how a driven 2-level system may develop nonlinear dipole moments that are forbidden between or within its stationary states, but it also broadens the class of materials suitable for optical energy conversion applications and magnetic field generation with light so as to include all transparent dielectrics.