What is wrong with my german shepherd?

You just described a situation I had with my dog last year. He even eats the same food as your dog. When I contacted my vet he asked me to look closer at his diarrhea. Sure even, when I looked I saw that my dog had worms. My vet said that dogs can get tapeworms from ingesting fleas. Even though my dog stays on flea prevention, the vet advised that he could get worms simply by licking an infected flea from his fur. With medicine, the tapeworms cleared up very quickly. Good luck.