First prepare a place, with either newspapers or a brown paper bag for draining doughnuts. Top those with paper towels. Clean kitchen counter or bread board sprinkle flour over, for kneading doughnuts.
Prepare a shallow bowl or plate with an inch of flour.
Sift flour, sugar, salt, baking powder, cinnamon and nutmeg. Mix in butter until crumbly. Stir in milk and egg. With floured hands, lightly knead the smooth dough.
Turn onto area prepared with flour. Pat dough in 1/4 inch thickness. Dip either doughnut cutter or two biscuit cutters (one 1-inch and one 3 or 4-inch) in flour. Use to cut-out doughnuts.
Carefully drop doughnuts into hot oil, only a few at a time. Fry, turning once, for about 3 minutes or until golden brown. Drain on prepared paper towels.
Sprinkle with powdered sugar or cinnamon-sugar mixture. If frying in deep fryer, heat oil to 375 degrees F.