In a large skillet over medium heat, cook the ground beef and onions until beef is evenly browned; do not drain. Season with salt and pepper to taste. Stir in flour 1 tablespoon at a time, until beef juices have been absorbed.
Stir in tomatoes, tomato juice, and water. Simmer on low heat to thicken.
Stir in nutmeg and sugar; simmer until flavors are blended well.