Grate potatoes and onions on a large-hole grater. Splash with lemon juice and squeeze out excess water.
Mix flour, milk, egg, baking powder, and nutmeg. Add to the potatoes and then add the melted butter.
Heat some peanut oil in a skillet and fry until golden on one side. Flip, and cook the same way on the other.
Serve with watercress, caviar, applesauce, and creme fraiche.
**For Passover, omit the baking powder and replace the flour with matzo (ground into flour), which will make a slightly denser latke. Fry it slowly.