Potato Soup with Ham and Cheddar

Ingredients:
4 1/2 cups potatoes, peeled & cubed
1 stick butter
1 large onion, chopped fine
5 tablespoons flour
cayenne pepper (to taste)
black pepper (to taste)
5 cups milk
1 teaspoon salt
3 cups cooked, cubed ham
2 1/2 cups shredded cheddar cheese,

Preparation:
Cook potatoes in boiling water until tender. Drain; reserve 2 cups of the liquid.Melt butter in a saucepan over medium heat. Add onion; cook, stirring, until tender. Stir in flour; season with red and black pepper. Cook for about 3 more minutes, stirring. Add potatoes, reserved liquid, milk, and salt; stir well. Add ham; simmer for 5 minutes, stirring frequently. Remove from heat and let cool for about 5 minutes. Add cheese; stir until melted.