Heat water to boiling, then add 2 tablespoons butter and salt. Remove from heat and add cold milk. Add potato flakes and stir gently. Fluff with a fork; do not whip. Let sit for 2–3 minutes to thicken then stir again and let cool to a temperature to be able to work with by hand.
Add 1 cup of flour and mix to form a rough dough. Turn out onto a well-floured work surface and knead, adding more flour, if needed, to form a sturdy dough. Pat dough out to a 6 x 9-inch rectangle, ½ inch thick. Cut into six 3 x 3-inch squares.
Melt butter or bacon fat in a pan over medium-low heat, about 1 tablespoon per batch of potato cakes. Fry potato cakes until well browned, about 8–10 minutes per side, working in batches if necessary. Serve hot.
