As seen in the picture provided when you recreate that exact same setup and give it a starting pulse with for example a redstone block or torch, a loop/clock is created. However, the peculiar thing is the redstone dust in that circuit does not seem to be powered, although it is clearly powering the circuit.

In short, the block state of the redstone dust does not get updated when it actually should.

You can also use the circuit to power things, but you have to attach a redstone repeater between it first as shown in the second picture. If there is no repeater between the piston and circuit it does not power.

Make sure the repeater in the circuit is set to a delay of 2 

setblock ~ ~ ~ repeater[delay=2]