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.