Its so wild to me that people that should know better pretend that this kind of stuff doesn't happen in every industry.

At this scale? Why don't you give some examples.

Pull our POV back far enough, and isn't "circular funding" just "The economy?"

Money circulates; it's what it does. The real question is to what extent circulation among a small group of firms is either collusion in disguise (i.e. decisionmaking by only one actual entity falsely measured as multiple independent entities) or a fragile ecosystem masquerading as a healthy one (i.e. an "island economy" where things look great in the current status quo, but the moment the fish go away the entire cycle instantly collapses).