In a large mixing bowl, dissolve yeast in warm milk and let sit for 5 min. Add egg, potato, butter, vanilla, and sugar, and mix until combined.
In a separate bowl, whisk together baking soda, powder, flour, and nutmeg. Add to potato mixture and mix until it forms a ball. Cover and refrigerate for 2 hours.
Meanwhile, in a medium saucepan, bring heavy cream and milk to a boil over medium-low heat (careful not to burn). Add 4-5 bags of chamomile tea. Cover and turn off the heat. Let simmer for 10 min to 1 hour.
In another saucepan, whisk together egg yolks and sugar. While whisking, slowly pour warm chamomile milk. Place the pan back on the stove over medium heat, whisking constantly until thick (about 5 min).
Over medium heat, whisk constantly until thick (about 5 min). Remove from heat; pour through a fine mesh sieve into a heatproof bowl to remove any curdled eggs. While whisking, add 1 tsp of ice water (add a tsp at a time until desired consistency). Let cool and Refrigerate.
Lightly flour a clean surface and turn over the donut dough. Cut into 4 sections and roll each section into 1/2 inch thickness.
Heat oil in a cast iron or heavy bottom saucepan over medium heat until it reaches 350F. Carefully drop donuts into the pan using a long slotted spoon, 4 at a time.
Fry until dark golden brown (2-3 min on each side).
Remove and place on a paper towel-lined plate. Optional: immediately roll the donut in granulated sugar or, using a sieve, dust with powdered sugar.
