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"hard aromatic seed of the East Indies," c.1300, from Old North French or Anglo-French *noiz mugue, from Old French nois muguete, unexplained alteration of nois muscade "nut smelling like musk," from nois "nut" (from Latin nux) + Latin muscada, fem. of muscat "musky" (see muscat). Probably influenced in English by Medieval Latin nux maga (cf. unaltered Dutch muskaatnoot, German muscatnuß, Swedish muskotnöt).
American English colloquial wooden nutmeg "anything false or fraudulent" is from 1830. Connecticut is called the Nutmeg State "in allusion to the story that wooden nutmegs are there manufactured for exportation." [John Russell Bartlett, "Dictionary of Americanisms," 1859]