Diabetes and inflammation is actually easily googled, but here is a respectable source: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1087185/
PDF: The underappreciated role of muscle in health and disease
There is a long and wordy section about muscle and insulin resistance, some choice outtakes:
However, over the past few years it has become evident that changes in the metabolic function of muscle itself plays a more direct role in the genesis of insulin resistance than previously appreciated. (This is rebutting the idea that higher fat levels explain insulin resistance.)
as little as a single bout of exercise [thereby stimulating triacylglycerol deposition in muscle intramuscular triacylglycerol (IMTG) oxidation] can transiently reverse insulin resistance (44).
The section concludes with:
Regardless of the specific intracellular mechanisms at the molecular level, it is clear that insulin resistance is not simply the result of increased fat mass and release of FFAs into plasma at an accelerated rate, with the muscle responding to elevated plasma FAA concentrations. Rather, alterations in the metabolic function of muscle are central to the development of insulin resistance and ultimately diabetes.
I am not finding an exact point at which it explicitly says "Muscle loss causes insulin resistance" but that was my personal takeaway from reading this some time back. (On the other hand, maybe it does explicitly say that and I am just rushed for time and have crap eyesight, so maybe I am just not finding it. Whatever.)