A comprehensive theory of the transverse dielectric function, light absorption and other aspects of photon propagation as well as level shifts, the chemical potential and statistical mechanics of hydrogenic fluids ranging from the fully ionized plasma to the atomic fluid, is presented. A Coulomb basis is used instead of the usual plane waves for second quantization. The commutation rules for these operators are discussed and a simplification valid for electron-ion systems is considered. The Coulomb basis simplifies the theory by replacing the six interaction potentials involving atoms, ions and electrons by a single term. The free, bound, and photo processes also reduce to a single term. As in the best available theory of the uniform electron gas we have calculated the mass operator contained in the polarization operator of the photon Green function to second order and included a partial summation of higher order effects via a screening function. The shifted and broadened energy levels, the chemical potential and the modified Saha equation are obtained from the one-particle Green function. The complex refractive index, the absorption profile, etc. contain terms in first order thus easily recovering effects not recovered in the existing theories. In the fully ionized plasma limit our results lead to the usual Geldart and Taylor type Fermi gas response theory. In the atomic fluid limit the polarizable-atom models of, for example, Bullough et al. are compared with our microscopic theory. Explicit algebraic expressions together with details of the evaluation of the matrix elements are given for the final results.
