|You’ll need an image (or a texture) for the background for this effect.
1)Open your image first.
|2) Create a new layer filled with black. Select the type tool and type the text.
3)Ctrl+Click on the text layer to load the text layer as a selection.
4) Blur the layer (Filter> Blur more) and then save this image in Photoshop 2 format (important!).
|5) Duplicate the image layer.|
|6) Hide the blurred text.
7) Move the duplicate layer to topmost.
|8) Then apply the Displace filter (Filter> Distort > Displace). Accept the defaults. You are presented with an Open/Save dialogue so navigate to the Photoshop 2 file you just saved and open it. The image is displaced using this image|
|9) Create a clipping group between the Displaced image and the text layer (by Option clicking their divider). Finally, if needed, Add a drop shadow effect.|