Preheat oven to 350F. In large bowl, mix together flour, baking powder, baking soda, and nutmeg. Set aside. In large mixing bowl, cream butter, about 30 seconds. Add the sugar and beat until fluffy. Add egg and mix well. Add the flour mix and eggnog alternately to the sugar/butter mix.
Cover and chill at least 4 hours. Dough may still be sticky but it is a soft dough and will be.
Take out half the dough at a time (leaving rest in the fridge). On a lightly floured surface, take one tablespoon of the dough and roll into a rope shape (about 1/2 inch thick and 8 inches long) On an ungreased cookie sheet, place the rope in a loop, cross one end over the other. Make the shape slightly oval. Bake 6 to 8 minutes, until edges are lightly browned. Remove cookies and cool on wire rack. While still warm, sprinkle tops with powdered sugar and nutmeg.