Peel and grate potatoes. Place the grated potatoes in a clean dishcloth or cheesecloth and squeeze the liquid out of them into a bowl. Let the liquid stand a few minutes, then drain the liquid, leaving potato starch at the bottom of the bowl. Add the potatoes.

Grate the onion over the potatoes. Add salt, pepper, nutmeg, flour and egg. Mix thoroughly.

Heat oil in a frying pan. You can use a non-stick pan and just a few drops of oil, if you wish, but for best results use 1/8 to 1/4 inch of oil.

Using about 1/2 cup, drop the potato mixture into hot oil and flatten with the back of a spoon. Fry 4-5 minutes on each side, or until golden brown. Drain on paper towels and serve hot with applesauce.