1. In top of a double boiler, over hot, not boiling water, combine sweetened condensed milk and butterscotch chips until mixture is smooth and thick, about 15 minutes, stirring occasionally.

2. Meanwhile, in a large bowl, combine cereal and peanuts. Pour butterscotch mixture over cereal mixture and toss until well-coated. Drop by teaspoonfuls onto wax paper-lined cookie sheets. Chill for 2 hours or until firm. Remove and store in a covered container in refrigerator. Makes about 5 dozen.