This isn't really a cogent criticism. There are cogent criticisms, but if something does actually operate according to a functional principle, there's nothing wrong with saying so.

The question is: does it?

That mechanistically a brain observes itself doesn't mean anything logically. If we were trying to generate logical proofs, sure, the best you could show would be self-consistency. But we're far, far from doing that. At this point, we're just trying to get some halfway decent models of how brains work. Self-consistency is plenty! That's much better than confusion.

(Note that it isn't clear that there is any way to avoid self-consistency as the endpoint, i.e., in practice it doesn't seem possible to avoid circular logic; the trick is to make the circle all-encompassing...as long as there's no mutually contradictory all-encompassing circle that also works, you might be on to something. See "coherentism". This isn't established, but one should at least be familiar with the coherentist criticisms of other forms of knowing before one tries to object that brains knowing themselves is circular logic.)