Q: Why can't I give a gift?

The short answer is that Apple don't allow it, but as far as I know they haven't said why.

http://support.apple.com/kb/HT2736 :

Note: When purchasing an iTunes Gift, a valid credit card must be on file; you can't purchase an iTunes Gift with store credit.

I want to know WHY I can't use the money I placed in an account to purchase a gift.

I have never seen an online retailer that does not have that exact same restriction.

For example, here is the statement from Amazon: "Amazon.com Gift Cards can't be used to purchase other gift cards or applied to any order containing another gift card. You'll need to provide a credit card, debit card, or other valid payment method to pay for the order if you have gift cards in your Shopping Cart. "

None of the retailers offers an explanation of why they have this policy, but it is safe to assume that drawing gifts out of an existing balance is a source of fraud.