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Sprinkle the yeast over the warm water in a small bowl and let it dissolve for 5 minutes. Put the milk and shortening in a saucepan and heat until the shortening is melted. Cool to lukewarm. Pour the yeast mixture into a large mixing bowl and add the milk mix. Stir in the 1/4 cup sugar, salt, nutmeg, eggs and 2 cups flour. Beat briskly until well blended. Add the remaining 2 1/2 cups flour and beat until smooth. Cover the bowl and let double in bulk, about 1 hour. Dust a board generously with flour and turn the dough mass onto it. This dough is soft and needs enough flour on the board to prevent sticking, but is easy to handle. Pat the dough into a round about 1/2 inch thick. Use a 3 inch doughnut cutter and cut out the doughnuts, placing them (and the doughnut holes) on greased baking sheets, 1 inch apart. These don’t spread much; they rise. Preheat oven to 450 degree F. Let the doughnuts rest and rise for 20 minutes uncovered. Bake about 10 minutes or a little longer, until they have a touch of golden brown. Remove from the oven. Have ready the melted butter and a brush. On a sheet of wax paper, spread the cinnamon sugar. Brush each doughnut and doughnut hole with butter and roll in the cinnamon sugar. Serve hot.
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